Break free from repetitive, unhelpful patterns and instead adapt and adjust your approach when faced with new situations and/or unexpected challenges. Learn from the past, and, if you were not in the industry then, do your homework before you say things like “rates of this magnitude are unprecedented!” To pivot, you must quickly assess the situation, stay flexible and seek support when needed. You have to break down the problem and learn from experience to build resilience. You must Proactively React!

Proactively Reacting means taking initiative and anticipating potential problems or opportunities before they arise. It involves planning, setting goals, and taking actions to prevent issues or achieve desired outcomes. In contrast, Reactive Behavior is responding to events as they happen. If you proactively react, you will be prepared and be making decisions in step with change, not begin to assess a situation once it has already happened and, thus, delaying materially the timeline to solve for the best outcome. If you allow for the delay, you will see loss of production, loss of revenue, and loss of team, amongst other things. Now, many will say “my production’s up!” Sure, but have you assessed the up- and downstream impact of the corners cut by not having the best trained loan officers, underwriters, risk and servicing personnel, and the right technology etc, as of yet? If not, get ready to give back a material portion of the revenue you’re making and, in a worst-case scenario, maybe even more than you took in. You don’t want to have to put up a defense, you want an offense that is always putting points on the board and not losing them later. You know the trips your best producers go on with the executive team? Make the trip a day longer, for example, and add an enhanced training session and watch your bottom line grow significantly. Same for your operating teams.

The mortgage industry at times, seems to have what I lovingly call selective amnesia. For those of us who have been through a cycle or three, it’s that moment when you begin to see parties in the industry make the exact same mistakes or behave the same way that has led to downturns or unnecessary corrections in the past. The current mortgage landscape is changing each and every day. It can feel like as soon as you’re done working on one issue, there are three more to take in and this may happen on the exact same day. It can feel like a grind. The good news? We’ve seen this movie before. There may be some new story lines and some new actors, but fundamentally the story is the same.

This is not a linear market, so stop behaving like we are going to get lucky with a big rate cut again. Reality? We wouldn’t have seen the last one if not for a global pandemic — and let’s hope another one of those is not on the horizon, even if we liked how many loans were originated. Those who can assess and execute immediately are those who will be left standing. Don’t be left behind.

This is not a linear market, so stop behaving like we are going to get lucky with a big rate cut again.

It has now been over 17 years since the housing crisis began, why are we still “stuck” in not only an Agency but also a primarily fixed-rate world? Believe it or not, housing overall was not materially more affordable in the past — but there were more products to assist home buyers, and they had flexible structures to serve their actual needs. If you think of this in terms of buying a birthday cake, it gets a lot easier. Not everyone likes vanilla cake. You have those who prefer chocolate, strawberry, or lemon, and the flavor of a cake is very similar to different types of income streams and employment. Much like you may have a strawberry cake with vanilla frosting, you may have a borrower with both W2 and 1099 self-employment income, as an example. If this is the case, why are we trapped in a Vanilla à la 30 year — Fixed world? You can’t get a strawberry cake everywhere, hence lenders need to identify the products that could make them stand out from the rest and take their business to the next level.

In 2024, the following is the breakdown of Residential Mortgages (Note, there’s single digit amounts of Non-QM blended into these numbers, as well)

Conventional loans: 78%

FHA loans: 13%

VA loans: 8%

USDA loans: 1%

Of the mortgage loans originated in 2024, Independent Mortgage Bankers originated 83% of all Single-Family Mortgage Loans. This equates to 75% of Fannie and Freddie’s total production, 89% of FHA’s total production, 94% of VA’s total production and 94% of GinnieMae’s total production. Not to mention, the Independent Mortgage Bankers, also originated the majority of non-agency (Non-QM, HELOC, and SFR) as well.

Where are we today:

Total Mortgages: 1.4 million mortgages were secured by residential property in the U.S. during the first quarter of 2025, a 14% decrease from Q4 2024. However, this is a 9.4% increase from Q1 2024.

Purchase Loans: The number of home purchase loans fell from 738,675 in Q4 2024, to 593,111 in the first quarter of 2025, a 20% decline from the prior quarter. However, this is a 4.74% increase versus 565,000 in Q1 2024.

Mortgage Refinance: The number of residential property refinances decreased by 10% to 580,170 in Q1 2025, versus 641,918 in Q4 of 2024. However, this is a 15.4% increase versus 491,000 in Q1 of 2024.

Total Dollar Value of Loans: The total dollar value of loans fell 18% from $582 billion in the fourth quarter of 2024 to $478 billion in the first quarter of 2025, with a notable decrease in the average loan amount (from approx. $395,000 to $342,000). My opinion is this will also stabilize with full year data.

The theme in the market is that there is a trend toward refinances becoming more prevalent, but that statement can only be made when you look at all mortgages originated in a vacuum. In Q4 2024 the breakdown of the 1.64 million loans originated was 44.6% Purchase, 39.1% Refinance and 16.3% Home Equity. In Q1 2025, 41.4% of mortgages originated were Purchases, with Refinances at 40.5% and Home Equity at 18.2% of the market respectively.

In Summary, when comparing
Q4 2024 to Q1 2025:

Purchase percentage: 44.6% in 2024 to 41.4% = a decrease of 3.2%

Refinance percentage: 39.1 to 40.5% = a 1.4% increase

Home Equity percentage: 16.3% to 18.2%= a 1.9% increase

What we are seeing above is not material yet. Why?

Of the 6.09 million mortgages that amounted to $1.82 Trillion dollars in balance for the entire calendar year 2024, 66.1% were purchase, 23.5% were refinance, and 10.4% home equity. Generally, these loans originated with a rate of 6.8% (based on a 12-month interest rate average for most popular products) for 30-year loans and 6% for 15-year loans. In 2025, we see a rate of 6.8% (average for the first eight months of the year for most popular products) for 30-year and 5.95% for 15-year, hence an indicator the trend is moving toward normalization.

Can we as an industry really say that there is an affordability crisis when 66.1% of mortgages originated in 2024 were for purchases?

Away from the above, we have absolutely begun to see an overabundance of quality findings and repurchase claims for contractually current performing loans. Counterparties also state that lenders will not see repurchase claims for every self-report, but you will, approximately 98% of the time, so let’s ensure that your risk and reporting requirements are implemented properly, so that you are not reporting loans that are not in violation of anything. For example, if you’re still waiting for a re-verification, that doesn’t mean you need to self-report a loan, as the reporting requirements generally are triggered when the lender or aggregator is in possession of actual documented facts or knowledge that a loan may actually have a misrepresentation and not that maybe there might be one and research is ongoing. Facts are extremely important. The above is not what the market is used to, nor is acting in this manner a proper way to assess credit risk.

Can we as an industry really say that there is an affordability crisis when 66.1% of mortgages originated in 2024 were for purchases?

We have also seen the rise of the new representation and warranty from the aggregators, stating that if an agency or “any other party” requires the aggregator or purchaser to repurchase the loan, the originating lender needs to repurchase the loan, pretty much with no questions asked. Lenders just say no — and once enough of you do, change can occur. Reminder: aggregators paid a price based upon the risk they were willing to accept for loans, generally originated to their underwriting guidelines. If the market changes or a counterparty puts the loan back to them, that should not trigger an immediate requirement for the lender to repurchase the loan. It is the job of the purchaser/aggregator to appeal the claim with documentation and detail and not lay down and expect the lender to buy back loans without material defects.

Historically, repurchases were generally only seen on underperforming or delinquent loans, hence this is a change to the script discussed above. The purpose of representations and warranties is to protect the purchaser of underlying mortgages or bond buyers from undue risk, generally, based on the manner the mortgage loan was underwritten at origination. If a Borrower makes four years’ worth of perfect mortgage payments and then defaults, the market has historically recognized that this is not based on an origination defect, but historically, they may at the time of default review the loan for possible misrepresentation in an attempt to offset a possible loss, if they believe one would be suffered. Today, we see things like loans originated in 2018 and the borrower has made all eight years of mortgage payments on time and the lender/aggregator receives a repurchase claim for alleged income or asset misrepresentation — if this were true, how did they make eight years’ worth of payments perfectly? Common sense tells you that doesn’t make sense. We must get back to a sane approach when it comes to repurchase and indemnification claims and reviews. We must stop counterparties from charging originating lenders multiple points on loans where there is absolutely no risk of loss today. We must also ensure if these dollars are collected properly, that they are given to the actual owner(s) of the loans when collected, who are generally the bond holders and not booked to their own balance sheet. Based on this and more, I call for a repurchase review overhaul and propose that a better structure be defined for the market, as originating lenders cannot be expected to look in their rearview mirror, nor forever be expected to reserve for loans they originated a decade or more ago.

Originating lenders cannot be expected to look in their rearview mirror, nor forever be expected to reserve for loans they originated a decade or more ago.

Furthermore, loss mitigation waterfalls need to be revised so that material detriments are not caused to the value of mortgage loans. For example, Fannie, Freddie, and FHA are still allowing modifications that convert 30-year mortgages to 40-year mortgages, but the market (including them) do not generally purchase 40-year loans currently, as an example. There is much more here to discuss to ensure that mortgage servicing rights are not impacted by old policy that has yet to be revised.

Finally, the above is only scratching the surface of where our industry is and what we need to learn, implement, and insulate ourselves from. Change can be good, so let’s level the playing field and provide the customer service that borrowers truly expect, in the form of diversified product and price. Let’s also get back to a market where portfolio managers truly manage their own portfolio risk and do not prune it through repurchase allegations. The time is now to ensure a market that is fair and equitable going forward, where originating lenders can partner with those who want all parties to win, be it on Main Street, Wall Street, Agency or Government Street. Let’s work together for the betterment of all.

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Jennifer McGuinness-Lubbert, CEO, Pivot Financial