When it comes to their home, Millennials are picky

For the generation that is waiting the longest to buy a home, they appear to be the pickiest too.

According to a new data set from the National Association of Home Builders, Millennials care just as much (if not more) about they want in a house rather than what they need.

And even though Millennials carry loads of student debt, they still want to live out the American Dream in a home, whether it’s rented or not.

The NAHB asked recent and prospective homebuyers about the features they want in a home and a community. Homebuyers were asked to rank more than 175 features in a home on a four-tiered scale of do not want, indifferent, desirable, and essential/must have.

The most popular specialty room, other than a bedroom, bathroom or kitchen, is the laundry room, with 50% saying it’s an essential while 36% said it’s more desirable.

On the bottom of the necessity list is breakfast nook and sunroom. Of those surveyed, 19% said both were an essential and 39% it’s just a desirable.

Having multiple family rooms was also at lower end of the list of desirables, with 24% saying a separate living room was an essential and 37% saying it was a desirable; 23% said a separate family room was an essential and 39% said it was a desirable, and 22% said a study/den/library was an essential and 41% said it was desirable.

Across generations, Millennials, Generation X, Baby Boomers and Seniors all agreed that an exercise room, media room and game room were a desirable.

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Expert: Here are 5 tech trends to watch in housing in 2020

As we move toward the new year, many experts and economists are forecasting the housing market will continue to see growth. Now, one expert looks at the technology advancements we will see in 2020.

HousingWire sat down with Steve Butler, AI Foundry president and founder, who gave five trends to watch for artificial intelligence in 2020.

Recently, HousingWire sat down with Butler to talk about AI, where he predicted that within just two years, the majority of mortgage originations won’t need a human to touch them.

Now, Butler is expanding on his thoughts for AI with five predictions for 2020:

1. AI enables “Minimal human hands” on loans

Due to advancements in AI and machine learning, within the next two years, we will see the majority of mortgage loans get manufactured and sold off to Fannie Mae and Freddie Mac with very little human involvement. It will be a much more automated, mechanized process, driven by AI. In a recent article in Forbes, Keith Polaski, Radius Financial Group co-founder and chief operating officer, said that his company’s goal is to deliver all of its loans without a human touch to secondary mortgage market buyers like Fannie Mae or Freddie Mac.

2. AI becomes vertical-specific

We will see the adoption of vertical-specific intelligent robots that have the level of industry expertise required for mortgage processing. These intelligent robots will play a key role in the process. More companies will turn to mortgage-specific robots with embedded industry knowledge. According to an Inc. Magazine story, five billion-dollar industries that will be impacted by AI include: real estate, automotive, education, customer service and IoT.

3. AI drives digital transformation to new levels

The mortgage process is very paper-based and analog. However, robots need digital data – solutions that can turn analog processes into digital ones will help the mortgage industry make new advances in digital transformation, replacing many of the old analog processes that have been used for decades (e.g. thousands of paper documents, verbal conversations to check and re-check information, emails and written communication throughout the loan process.)

4. AI skills elevate executive careers

An increasing number of mortgage executives will reach proficient level on AI as they embrace learning and using AI technologies. These new AI-savvy executives will enhance their careers, separate from their peers, and create opportunities to improve their business. For example, Polaski stated in this Forbes story that by using AI, his company has reduced their loan manufacturing cost by 70%.

5. AI creates “virtual assembly lines” 

The mortgage office will change and begin to look more and more like a series of connected robots accomplishing discrete functions on the loan lifecycle. A “loan assembly line” will begin to take shape.

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Mortgage Tech Rundown: Openly, roOomy, and Wolters Kluwer

Mortgage Tech Rundown looks at the latest news in mortgage technology, featuring new product updates, integrations and announcements.

Tech-enabled home insurance provider Openly launched on Tuesday, equipped with $7.6 million from its seed round of funding. The company said in a press release it aims to simplify the home insurance buying process by empowering home insurance agents.

In order to do so, Openly plans to sell its up-market home insurance exclusively through independent insurance agents, rather than using technology to completely remove them from the process.

“Our goal is to help agents as they work to modernize their businesses,” said Ty Harris, the CEO, and co-founder of Openly. “We let them offer their customers better, faster and more economical products with comprehensive insurance protection for a wide range of needs.”

roOomy, a technology company that offers virtual staging services and 3D modeling and rendering for interior design, announced a partnership with home furnishing company Havertys to enhance the home selling and buying process.

Through the partnership, Havertys has launched the Designer Application, which is a custom interior design tool that enables its design consultants to transform 2D images of their customers’ rooms to assist in creating photorealistic 3D renderings.

“Often, the problem with redesigning any room is visualization – it’s difficult to picture how the room might look like with new furnishings or to imagine how it will all fit together,” roOmy said in a press release. “But that’s a thing of the past – with Havertys latest offering consumers will be able to visualize the entire room like never before.”

Wolters Kluwer, a Netherlands based information and financial services company, launched a new consumer lending offering that aims to enhance the online loan origination capabilities of U.S. community banks and credit unions.

The offering, Online Applications for Consumer Lending, is powered by Temenos Infinity, the digital front office product from banking software provider Temenos.

By integrating seamlessly with Wolters Kluwer’s ComplianceOne solution, the offering allows consumers to begin a loan application from any digital device, at any time.

“Until now, community banks and credit unions had few options available for providing online consumer loan applications, other than to build their own in-house functionality,” said Steven Meirink, the executive vice president of Wolters Kluwer Compliance Solutions. “Online Applications for Consumer Lending helps level the playing field with larger institutions and internet-only banks, delivering an appealing consumer design and high-tech experience without a heavy technology investment.”

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CoreLogic expects home prices to do this in the next 12 months

Nationally, home prices increased 3.5% year over year in October, according to CoreLogic‘s latest Home Price Index Report.

To be more specific, prices rose on lower-priced homes. A big trend seen in the 2019 housing market was tight inventory in both single-family and multifamily, creating an increase in prices.

The lowest priced home tier increased 5.5% year over year in October 2019, compared to 4.7% for the low- to middle-price tier, 4% for the middle- to moderate-price tier, and 3.1% for the high-price tier, according to CoreLogic.

(Image courtesy of CoreLogic. Click to enlarge.)

Going forward, CoreLogic expects home prices to increase 5.4% from October 2019 to October 2020.

Over the last six months, home prices have been increasing from between 3.2% to 3.5%, which means the rate of home price growth is leveling off.

In September this year, home prices rose 3.5% compared to September last year. At the time, CoreLogic predicted home prices will increase by 5.6%, come September 2020.

Idaho saw the largest and highest amount of price increase, with annual home price appreciation of 10.9% in October 2019.

Connecticut saw the lowest price appreciation increase, hovering just around zero. Connecticut home prices in October 2019 were also the farthest below their all-time HPI high, still 16.5% below the July 2006 peak.

(Image courtesy of CoreLogic. Click to enlarge.)

Overall, home prices in 41 states (including the District of Columbia) have risen above their nominal pre-crisis peaks, CoreLogic states.

While annual price increases slowed in 38 states compared to 2018, prices in Nevada increased by 3.2% year over year in October 2019, an 8.7-percentage-point tick down from the 11.9% annual increase in October 2018, signaling a slow down.

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Mortgage credit eases in November, MBA says

It became easier to get a mortgage in November, according to data published Thursday by Mortgage Bankers Association.

The group’s Mortgage Credit Availability Index rose 2.1% to 188.9 last month, indicating a loosening of credit standards. It was close to the 11-year high of 189.5 in June, according to MBA. November’s reading was the third-highest reading of the post-crash years.

“Credit availability rose for the third straight month in November, with an increase in supply across all loan types,” said Joel Kan, an MBA economist. “Expanding credit availability will continue to support active levels in mortgage lending, even as refinance activity starts to level off.”

Measuring credit availability by loan type, the government MCAI that includes loans backed by the Federal Housing Administration, the Veterans Administration and the U.S. Department of Agriculture saw its first increase in nine months. The improvement was “driven by streamline refinance programs,” MBA said in a statement.

The Conforming MCAI that measures loans backed by Fannie Mae and Freddie Mac rose 0.2% after declining through most of 2019.

The biggest jumps were in the two indices measuring private-label mortgages. MBA’s Conventional MCAI, including mortgages not backed by Fannie Mae, Freddie Mac, the FHA, the VA or the USDA, rose 1.4% and the Jumbo MCAI rose 2.2%.

“Most notably, the jumbo index climbed to yet another record high, as investors increased their willingness to purchase loans with lower credit scores and higher LTV ratios,” MBA’s Kan said.

The MBA’s credit availability indices analyze data from Ellie Mae’s AllRegs Market Clarity covering several factors related to borrower eligibility such as credit scores, loan type, and loan-to-value ratios. The data comes from over 95 lenders and investors, MBA said.

Low mortgage rates will push home lending this year to a 12-year high of $2.07 trillion, MBA said in a Nov. 20 forecast. Refinancing probably will reach $796 billion, the most since 2016, MBA said.

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HomeStreet Bank continues move away from mortgages, sells interest in Penrith Home Loans

Throughout this year, HomeStreet Bank shifted away from the mortgage business, selling off much of its retail mortgage origination business, along with nearly all of the mortgage servicing rights associated with the loans originated in those retail outlets.

That move included selling a sizable piece of its origination business to Homebridge Financial Services, and selling more than 70% of its MSR portfolio to New Residential Mortgage and PennyMac.

But the bank isn’t done shedding the mortgage-related pieces of its business quite yet.

HomeStreet announced Thursday that it sold off all of its ownership interest in WMS Series, which does business as Penrith Home Loans.

Penrith operates in the Pacific Northwest and was an affiliated business arrangement between one of HomeStreet subsidiaries and franchisees of Windermere Real Estate, which has 300 offices and more than 6,500 real estate agents throughout the western part of the U.S.

Through the partnership, Penrith operated mortgage businesses within certain Windermere offices.

And that arrangement will continue going forward, as HomeStreet sold its interests in Penrith to a subsidiary of Windermere Services, the parent company of Windermere Real Estate.

Under the new agreement, Windermere Services will continue to operate Penrith, in conjunction with the Windermere Real Estate franchise owners, under a new structure.

According to the companies, HomeStreet Bank will provide “certain transition services on arm’s length terms to Penrith for a period of time following this sale.”

In a release, HomeStreet stated that the completion of this sale “further reduces” its interests in mortgage origination.

“We at HomeStreet have had the good fortune to have been in business with Windermere for over twenty years and it has been a successful part of our overall business,” said Mark Mason, CEO and president of HomeStreet. “As we continue to focus on the growth of our commercial banking operations, we felt it was the right time for HomeStreet to exit this business, but we wish Penrith all the best and expect it will continue to be a successful business as an independent company going forward.”

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FHA reverse mortgage limit set to rise in 2020

Just as it did with forward mortgages, the Federal Housing Administration is increasing its maximum claim amount for reverse mortgages for 2020.

According to the FHA, the HECM limit will increase in 2020 to $765,600 from 2019’s level of $726,525.

This marks the fourth straight year that the FHA has increased the HECM limit. Just two years ago, the loan limit was $675,650, meaning the HECM limit has increased by almost $100,000 since 2018.

The HECM limit is based on 150% of the Federal Housing Finance Agency’s conforming loan limits for Fannie Mae and Freddie Mac, which were recently raised to more than $510,000.

But unlike Fannie and Freddie’s loan limits and FHA’s forward mortgage limit, there is no geographic variation for the HECM loan limit.

The reverse mortgage limit is $765,600 for all parts of the U.S., including the high-cost areas and the special areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where forward mortgage limits far exceed the rest of the country.

By definition, a reverse mortgage – also known as a Home Equity Conversion Mortgage, or HECM – is a financial product for homeowners 62 and older that allows borrowers to convert a portion of the home’s equity into cash without incurring monthly payments.

While the loans are made by private mortgage lenders, they are insured by the federal government, which guarantees that borrowers will never owe more than the house is worth.

And, for as long as the borrower lives, he or she can remain in the home so long as they make property tax and insurance payments, keep the home in good repair, and retain it as their primary residence.

The increase of nearly $40,000 over last year’s HECM limit means that borrowers will soon be able to extract more equity from their homes using a government-insured reverse mortgage.

It also might mean that more consumers could qualify for the loan.

Because the HECM requires borrowers to pay off an existing mortgage before obtaining the loan, some borrowers with high mortgage balances may not have been able to secure enough proceeds to qualify. Now, with a higher claim amount, there may just be enough money in the HECM loan to make it work.

According to the FHA, the new HECM limits are effective for case numbers assigned on or after Jan. 1, 2020, through Dec. 31, 2020.

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FHA loan limits increasing for almost all of U.S. in 2020

Thanks to increases in home prices in 2019, the Federal Housing Administration loan limit will increase for nearly all of the country in 2020.

According to an announcement from the FHA, the 2020 FHA loan limit for most of the country will be $331,760, an increase of nearly $17,000 over 2019’s loan limit of $314,827.

That loan limit applies to much of the country, with the figure determined as a percentage of the national conforming loan limit for Fannie Mae and Freddie Mac, which is increasing in 2020 to $510,400.

FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, to set single-family forward loan limits at 115% of median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage limits by Metropolitan Statistical Area and county.

FHA’s 2020 minimum national loan limit, or “floor,” of $331,760 is 65% of the national conforming loan limit of $510,400. This floor applies to “low-cost areas,” which are counties where 115% of the median home price is less than the floor limit.

Meanwhile, there are a number of counties (approximately 70) where the median home price far exceeds the FHA loan limit floor. Those areas where the loan limit exceeds this floor are considered “high-cost areas”, and HERA requires the FHA to set its maximum loan limit “ceiling” for those high-cost areas at 150% of the national conforming limit.

Therefore, for those approximately 70 “high-cost” counties, the FHA’s 2020 loan limit will be $765,600, an increase of nearly $40,000 over 2019’s total of $726,525.

Click here to see the counties that qualify as high-cost and therefore have loan limits of $765,600.

There are also a number of counties where the 2020 loan limit is between the floor and the ceiling. Loan limits in those counties, which are based on the median home prices in those counties, vary from just above the floor of $331,760 to just below the ceiling of $765,600.

Click here to see a list of the counties where the 2020 loan limit falls between the floor and the ceiling.

There are also a few areas where loan limits are calculated differently than the rest of the country due to the specific nature of those housing markets.

As in previous years, Alaska, Hawaii, Guam, and the U.S. Virgin Islands have a higher limit “ceiling” than the rest of the country to account for the “higher costs of construction.”

In those areas, the 2020 FHA loan limit is $1,148,400.

According to the FHA, the loan limit is going up in almost all of the 3,233 counties where it backs loans, but there are a handful of counties where the loan limit is actually going down.

Per data from the FHA, there are 11 counties where the loan limit is decreasing. In three of those counties (Dutchess County, New York; Orange County, New York; and Lincoln County, Idaho), the loan limit is decreasing by approximately 50%, due to the home price changes in those areas.

Click here to see the areas where loan limits are decreasing in 2020.

Each year, the FHA continues to increase how many counties see an increase in the FHA loan limits.

Back in 2016, the FHA increased loan limits for just 188 counties; in 2017, this number jumped to 2,948 counties; then to 3,011 counties for 2018. In 2019, the FHA loan limits increased in 3,053 counties.

Click here to see all the rest of the counties where loan limits are increasing in 2020.

It should also be noted that both the FHA loan limit floor and ceiling are increasing on two-unit, three-unit, and four-unit properties, as shown in the image below.

To read FHA’s full breakdown of all the 2020 loan limits, click here.

According to the FHA, the loan limits are effective for case numbers assigned on or after Jan. 1, 2020, through Dec. 31, 2020.

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Multifamily delinquencies remain at record lows in Q3

Commercial and multifamily mortgage delinquencies remained at record lows in the third quarter of 2019, according to the Mortgage Bankers Association’s latest Commercial/Multifamily Delinquency Report.

“Loans financing commercial and multifamily properties continue to perform very well,” said Jamie Woodwell, MBA vice president of commercial real estate research. “Delinquency rates are at or near record lows for nearly every capital source, with the rate for commercial mortgages held by banks at its lowest since the inception of the series 25 years ago.”

“Solid property fundamentals, strong property values and low interest rates are all helping to keep delinquencies down,” Woodwell said.

MBA’s quarterly analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

Here were the delinquency rates for each group for the third quarter:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.45%, a decrease of 0.01 percentage points from the second quarter
  • Life company portfolios (60 or more days delinquent): 0.03%, a decrease of 0.01 from the second quarter
  • Fannie Mae (60 or more days delinquent): 0.06%, an increase of 0.01 percentage points from the second quarter
  • Freddie Mac (60 or more days delinquent): 0.04%, an increase of 0.01 from the second quarter
  • CMBS (30 or more days delinquent or in REO): 2.29%, a decrease of 0.17 percentage points from the second quarter

Commercial and multifamily are having a strong year as originations rose 24% from the third quarter of 2018 and 9% from the second quarter in the third quarter this year, a recent MBA survey states.

This should help propel multifamily originations, which are set to hit yet another all-time high in both 2019 and 2020, according to the MBA.

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Freddie Mac: Mortgage rates hold steady amid economic uncertainty

This week, the average U.S. fixed rate for a 30-year mortgage came in at 3.68%. Although this rate is left unchanged from last week’s percentage, it’s still more than a percentage point below the 4.75% of the year-earlier week, according to the Freddie Mac Primary Mortgage Market Survey.

“This week the economy sent mixed signals, leaving mortgage rates unchanged,” said Sam Khater, Freddie Mac’s chief economist. “Survey data for manufacturing and service industries varied while construction spending fell modestly. However, homebuyer demand continued to improve, rising 8%. Clearly homebuyers remain bullish on the real estate market.”

The 15-year FRM averaged 3.14% this week, slightly retreating from last week’s 3.15%. This time last year, the 15-year FRM came in at 4.21%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39%, falling from last week’s rate of 3.43%. Last year, the 5-year ARM was much higher at 4.07%.

The image below highlights this week’s changes:

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