UWM fends off critics of its 1% down program

Lender to set aside $20 million monthly for the program, top official says

UWM fends off critics of its 1% down program

More than 1,000 applicants have signed up for United Wholesale Mortgage’s “Conventional 1% Down” in the first week of its launch, a top company official said amid criticism the program’s strict eligibility guidelines are too narrow to assist a great number of would-be homeowners.

Launched April 12, the “Conventional 1% Down” offering is designed to entice borrowers seeking affordability by providing a further 2% grant for a total package of up to $4,000 toward a down payment for a home. In the days since its launch, the program has garnered criticism centered around the total offered that may not be of much help. Moreover, critics say the program’s requirements – available for homebuyers who have an income at or below 50 percent of the Area Median Income (AMI) and a 97 percent LTV – has potential to reduce the pool of eligible applicants even more.

“Four grand – that’s a lot of money,” Alex Elezaj (pictured), UWM’s chief strategy officer, told Mortgage Professional America during a telephone interview. “And again, we’re talking about people who need it the most. A lot of people who have some negativity around it aren’t the people who need the most help on products like this. Up to $4,000 with us contributing 2% as a grant is a massive win. Just in the first week since we launched it, we’ve had over 1,000 applications for new loans for this product. Anybody who’s going to talk anything silly about it doesn’t understand the market or the need. It’s a huge win for consumers.”

Helping with affordability

He added the program was designed not only to help those needing assistance the most, but brokers as well: “At a high level, we remain focused on helping more borrowers – including those who need affordability assistance to achieve the dream of homeownership. That’s just how we think about it. How can we help everybody across the board? It’s a huge win for consumers because they receive down payment assistance to help with their home. Getting 1% down payment assistance for up to $4,000 is a really big win for consumers. And as we get into the purchase season and as we look into helping FHFA’s [Federal Home Finance Agency] overall goal of homeownership, this is just a big win for consumers across America and brokers because it’s available only through the broker channel.”

To buttress  the point, UWM’s spokesperson provided a testimonial from Whitney Beaubien of Moving The Mitten Mortgage. “My client had been looking for a new home, but she was on a very strict budget as she is a younger woman who had just graduated college and started her career,” Beaubien said. “Once she found the perfect home, I knew that we needed to find the perfect mortgage. When UWM released the 1% conventional loan offering, I knew it was the perfect fit for her.”

Beaubien showcased the significance of the $4,000 cap on her client: “This loan allowed my client to save $3,050 in her rainy-day fund and allowed me to win the deal over a local bank who was offering the same rate to my client but with no down payment assistance. I know that by helping save my client $3,050 and the service that UWM offers, she will be my client for life.”

Defending the program against skepticism

Others are decidedly more skeptical. Florida loan officer Rayce Robinson posted an Instagram video slamming the UWM program, noting the strict AIM requirements to participate. Other critics posted pejoratively in the comments thread to a video featuring UWM’s vice president of sales Eric Mojica that touted the program.

“Again, this is another product the broker has in their wheelhouse,” Elezaj said when asked about such criticism. “Even if their consumer doesn’t qualify for those products, there are others they can put them in.”

He also scoffed at the notion the program won’t help a wide range of consumers: “We estimate that about 10% of all our loans meet these criteria,” Elezaj said. “This is going to cost us probably about $20 million a month for UWM, doing this as a grant. That’s the investment we’re making in helping consumers, and that’s the investment with what we’re helping FHFA achieve with their affordability goals across the board. A lot of people who don’t like it simply don’t have the commitment from their companies to do something like this. They could all do it if they wanted to, but the reality is they don’t and UWM is. And that’s why you see some people have pushback because, naturally, if they don’t have something that we do that is really helping consumers, they’re going to push back on it.”