Michigan based lender composite wholesale mortgage (UWM) has introduced a build-to-permanent loan that covers the cost of building a home and then converts to a permanent mortgage once construction is complete.
Thank you for reading this post, don't forget to subscribe!Starting February 1, UWM’s one-time close construction loans will be available on 15- and 30-year fixed conventional loans and 7- and 10-year adjustable-rate mortgages (ARMs), the firm said Wednesday.
The loan will cover a maximum construction period of 11 months with a one-month modification. It is available for investment, purchase of primary and second home as well as rate/term refinance.
“The streamlined process and assured one-time close new construction loan offering is unmatched and will make brokers heroes with builders, real estate agents and contractors, and move their borrowers to their dream home,” Matt Ishbia, Chairman and CEO of UWM, said in a statement.
This type of loan has only one set of closing costs to pay, reducing the borrower’s overall fees. According to the firm, the market improves after construction is completed, with a down payment, a full credit report to order and an automatic modification with an approval, it also has an interest rate.
UWM will enable communication of information throughout the approval process, providing a checklist for project and builder approval to all involved parties.
Once the loan is closed, UWM claims that it will handle the rest of the process by being in direct communication with the builder at the subsequent draw of lots as well as subsequent inspections, to confirm the pace of the project.
The debt product is the latest offering from UWM, which is ramping up its efforts to increase market share in a shrinking margin environment.
UWM – who took the Genesis crown from the competitor rocket hostage It recently took another major step to reduce prices in the third quarter – 2023 – thanks to its aggressive pricing strategy.
The lender is offering a maximum of 40 basis points per loan to its brokers with an overall reach of 125 bps to gain market share.
While mortgage attorneys said the “control your price” initiative does not clearly cross a legal line, they raised compliance concerns—including rules governing the compensation of loan officers; appropriate lending; and unfair, deceptive and abusive practices. These areas of compliance fall under the umbrella of regulators such as consumer financial protection bureau (CFPB) and the U.S. Department of Housing and Urban Development (HUD), according to attorneys.
UWM’s Deputy General Counsel and Chief Compliance Officer stated that “there is no unique regulatory risk with this program.”
UWM, which originated $33.5 billion in the third quarter, launched 2-1 and 1-0 temporary buyouts before expanding into jumbo loans and recently announced a $37.35 flat fee for credit reports.
