In response to my real estate agent quote, “No family wants to push an elevator button to go home,” when talking about families looking to move out of the city, thank you to Ken S. who sent this article about nationwide relocations during the pandemic. And the upswing in activity isn’t confined to lower price points. Realtor Chet Gohd who pointed out that in the Oakland/Berkeley market, near San Francisco, for a variety of reasons there have already been more transactions in 2020 north of $4 million, with plenty of active listings, than in any other entire year!
Thoughts on housing economics
So what is going on in the housing market, with state economies reopening? Is there pent up demand? Josh Stech, CEO of Sundae, wrote, “There is absolutely pent up demand. Recent purchase applications were up 6.7% year over year, which shows that people were waiting for shelter-in-place to be lifted. The demand is driven by the shortage of homes on the market that preceded the pandemic. With the coronavirus as a backdrop, people are still not comfortable listing their homes and having buyers walk their property. The demand-supply imbalance is contributing evidence. Low interest rates are increasing demand as well. On top of that, while people were sheltering in place, they were spending a lot of time thinking about remodeling and whether their current house meets all of their family needs.
“A National Association of Realtors survey showed that 34% of consumers were delaying buying a house or pausing house search due to job concerns. We expect many of these people will come back as states begin to re-open. There are still plenty of buyers out there who can obtain financing, and low mortgage rates are helping them afford higher prices. Sentiment has shifted, however, and many buyers are looking for a deal which may slow transactions.
“Assuming the average American has not been impacted by COVID, they will take advantage of the opportunity to buy or refinance. Fannie Mae is anticipating a 51% jump in refi’s from 2019. The Federal Reserve is determined to do whatever it takes to keep the economy afloat, so interest rates are not likely to go up any time soon, and may in fact go lower. Those who can refinance because their financial situation has not been impacted are refinancing right now. Lenders have implemented more checks along the way like multiple employment verifications, but people with good FICO scores and incomes are taking advantage of the opportunity.”
Josh addressed the number of people entering into forbearance agreements. “The number of people who entered into forbearance agreements is in line with what the rest of the economy is doing. The majority of job losses have come among mid- and lower income earning industries. Ginnie Mae’s loan portfolio shows the highest percentage of loans in forbearance (11.6% as of May 17th compared to 6.36% for Fannie and Freddie). Ginnie Mae’s mission is to increase access to credit for first-time homeowners, as well as low and moderate-income borrowers. Those homeowners are experiencing more distress. The decline in employment and income is hitting FHA and VA borrowers hard. With that said, forbearance requests seem to be declining week over week, which is a good sign.
“People usually refinance to lower their monthly payments or to cash out. With 30-year fixed mortgage rates hovering around 3%, anyone whose rate is 4% or higher, who has a job, a conforming loan, and good credit should consider refinancing given prices might go down and refinancing might be harder once the supply/demand equilibrium is restored. This is true whether it’s to lower monthly payments or to ensure they have money put aside because HELOCs and equity lines are more expensive or if they anticipate needing cash. General market consensus is that the rates will stay low for the next 12 to 18 months thanks to the Fed’s commitment to stabilize the economy no matter what it takes. Once the stimulus ends, rates are likely to go up.”
Evolve Mortgage Services CEO Paul Anselmo has a warning, however. “The Mortgage Bankers Association reported that an estimated 4.2 million mortgages were in forbearance as of May 17. With the Federal Housing Financing Agency having recently indicated that no lump sum will be required by Fannie Mae and Freddie Mac borrowers at the end of forbearance, many of these mortgages will need to be modified. But skyrocketing credit card forbearances signal trouble ahead. Because payment deferrals, stimulus checks and unemployment compensation are not going to be enough (in addition to delays in the PPP programs) many on the edge will not easily recover even when returning to full employment. Mortgage servicers will need to identify which borrowers are viable candidates for loan modifications well ahead of the end of forbearance by performing portfolio analytics for predictive modeling now. With such preparation, servicers will be able to focus on this group early on. Once servicers have identified borrowers who are likely to qualify for a modification, Evolve has both those analytics and eModification capabilities.
A hummingbird’s wings beat about 70 times every second. That is almost as many times as a loan processor touches a loan file. Actually, STRATMOR’s studies show that processors, on average, manage 26 loan files in their pipelines at any given time. Lenders everywhere are trying to reduce friction, and vendors are often involved. Let’s take a random look at what vendors are up to these days, as they do much more than make up news words for products that wreak havoc on spell checking.
eMortgages and eClosings have become an important tool for lenders to ensure that their operations continue, even in times of a health crisis. Recognizing this fact at the outset, Secure Insight has spent the past few months collecting and verifying the special licenses and credentials of thousands of settlement professionals nationwide to display in its risk profile reports. Secure Insight’s analysts have developed a matrix of state by state rules and regulations defining when, where and how remote notarization and e-notarization may occur legally to guide the development of this new aspect of their database features. Secure Insight President, Andrew Liput, commented “When you include this new data with the fact that they have added more than 3000 new profile records from throughout the country just this year, you get a picture of the value of integrating with the mortgage industry’s largest and best database to manage closing and wire fraud.”
Lenders are certainly embracing eClosing technology. For example, Fairway Independent Mortgage Corporation offers Fairway ExpressClose as a virtual closing solution for consumers.
IDS has enhanced eSign tools for state-specific document functionality in its flagship document preparation platform idsDoc. The addition of this functionality enables IDS clients to automatically access state-specific documents that are electronically fillable, where allowed by law. The IDS library of state-required documents is a collection of expansive regulatory research and is maintained and updated regularly by the IDS Compliance Department. In addition, the department maintains the “IDS State Disclosure Matrix,” a reference document which lists the state-specific documents available in idsDoc and notes the default parameters used to determine when specific documents should be included in a loan package. Clients can have all disclosure documents electronically signed in the eSign Room with a unique login and secure email link for each document signer.
HSBC Bank USA, N.A., (HSBC), part of the HSBC Group, one of the world’s largest banking and financial services organizations, announced it has partnered with RateReset to license its platform, KNOCK KNOCK. The platform, branded “EasyReset” for HSBC, allows the bank to reset existing Adjustable Rate Mortgage (ARM) loans with the click of a button.
Traditionally used by mortgage loan borrowers to compliantly eSign initial mortgage loan document disclosures and closing documents, DocMagic has modified its eSign platform, making it document agnostic. This version can easily handle the execution of important documents such as contracts, NDAs, LOIs and virtually any other agreement, to be electronically signed and legally binding. As an act of goodwill, DocMagic is providing this eSign technology for free in order to help organizations increase productivity, efficiency, and compliance among work-from-home employees during COVID-19 stay-at-home orders as well as after they are lifted.
Calyx announced its new, cloud-based origination platform, Zenly, that can be purchased and operational in 15 minutes. The easy-to-use system efficiently handles all of the steps needed to complete a full mortgage application and deliver it, with the accompanying documentation, to a wholesale lender. Zenly also includes seamless loan submission to Fannie Mae’s Desktop Originator (DO) Through DO, sponsored mortgage brokers have access to the automated underwriting system, Desktop Underwriter® (DU). Using Zenly’s built-in, mobile-friendly borrower point-of-sale, an originator can import loan application data, pull credit, and automatically collect and verify borrower assets.
Cloudvirga secured strategic investments from original investors to expand its retail lender platform to wholesale lenders and their brokers.
Asurity’s RiskExec Suite is being enhanced with the release of a new Fair Servicing module, initially covering analytics for Forbearances and Loan Modifications.
ACES Risk Management (ARMCO) announced the launch of QC NOW, a web series covering current regulatory and operational changes related to quality control, compliance and risk for independent mortgage lenders, banks and credit unions. Upcoming topics for the web series include: How to Ensure Data Integrity with HMDA Reviews, Mortgage QC Industry Trends – Future Outlook, QC Reporting Essentials, and State of Servicing QC.
In MISMO news, the Industry Loan Application Dataset (iLAD), the modernized dataset for exchanging loan application data, has been updated to “Candidate Recommendation” status. This means it has been thoroughly reviewed by a wide range of organizations and industry participants and is available for use. The release of iLAD (v2.0.1) incorporates recent updates to the drafted specification (v2.0) following a 30-day public comment period announced in March 2020. MISMO has incorporated changes to iLAD that had been previously made to its source files, which include the Uniform Residential Loan Application (URLA) dataset, Version 1.8; Desktop Underwriter AUS Request dataset, Version 1.8.1; and Loan Product Advisor AUS Request dataset, Version 5.0.06. The release and use of MISMO standards and other resources, including iLAD, are governed by the MISMO Intellectual Property Rights (IPR) Policy.
Wipro Gallagher Solutions launched NetOxygen v7.0, the latest version of its NetOxygen loan origination solution platform. NetOxygen v7.0 significantly simplifies every touchpoint in the loan process, making it the most intuitive and responsive version to date. With this release, WGS continues its ongoing efforts to fuel the lender of the future through intuitive technology. NetOxygen v7.0 enhances roadmap features to improve the customer experience, increase efficiencies and reduce cycle time and overall origination costs. A webinar will be held on June 10, 2020 at 11 a.m. CT, to showcase the key features of NetOxygen v7.0. Click here to register.
A recent Press Release announced that National MI has integrated with PMI Rate Pro.
SimpleNexus has advanced the release of its Closing Portal to help lenders meet urgent consumer demand for mobile mortgage closing solutions. Lenders can securely collaborate with settlement service providers for streamlined closing package delivery and will pave the way for hybrid mortgage closings.
Covius’ credit reporting platform, Funding Suite® is now integrated into Blend providing customers with a range of credit services for origination and quality control, including credit scores, rescoring, merged reports and supplemental lien and judgment reports. These services can be integrated directly into the lender’s front-end consumer portals or accessed by loan officers and processors. Funding Suite lets users select preferred credit repositories and upgrade to a three-vendor report without having to re-pull a consumer’s file. In addition,
Covius’ platform provides detailed cost accounting, business intelligence dashboards and real-time status updates on open orders and interactive maps on credit order locations.
a la mode’s new tool, PropertyAssist, is designed to help appraisers safely and easily get information from homeowners directly into their WorkFile, without entering the property (interior pictures, etc.) and it’s free to current users.
Pavaso launched Essential Notary, a Remote Ink-Signed Notarization (RIN) solution that allows a signer and notary in different locations to complete the signing and notarization of real estate closing documents on paper. Unlike Remote Online Notarization (RON), electronic signatures and notarizations are not used; printed documents are provided to the signer(s) for wet ink signatures to be applied. Documents are signed in view of the webcam, while the notary witnesses the signing of each document requiring a signature. The platform can also capture, via webcam, the assembly and sealed packaging of the wet-signed documents for delivery to the notary, where necessary. For more information about Essential Notary, visit pavaso.com/essential-notary
Rocket Mortgage partnered with Titlesource & Pavaso to ensure that anyone within that 80% can select their preferred method of closing.
Indecomm Global Services announced the launch of the retail version of its IncomeGenius® income calculation automation software. IncomeGenius® Retail is now available for mortgage brokers and small and mid-size lenders who wish to utilize automation income calculations for their clients, yet do not need the full, flagship subscription. With the process of calculating income simplified and automated, this can be used at the start of the loan process by mortgage loan originators and processors to obtain accurate income which improves the borrower experience.
Global DMS has integrated its eTrac valuation management platform with ProxyPics’s mobile app facilitating the delivery of photographs of a subject property when access to the property is unavailable. The entire process is automated, secure, protects against fraud, and requires no additional work or oversight from those using eTrac. It’s also simple for homeowners, who utilize the ProxyPics mobile app to easily take the required photos, answer pre-set questions about the quality, condition, and unique characteristics of their home, and submit the information back to eTrac.
A wife talks to her husband with a sweet voice, “You look great in that dim light. You look just like Brad Pitt.”
Lifting his eyebrows, the husband asks, “And how do you know Brad Pitt?”
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Reducing Friction”, focused on operations changes. If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)