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Requests for payment relief are expected to soar as businesses remain shuttered to control the spread of the deadly virus and job losses mount.
About 7.3% of U.S. mortgages entered forbearance plans in April, providing temporary relief to more than 3.8 million borrowers who have lost income during the coronavirus pandemic.
“The data indicate all types of inquiries dropped significantly and that consumers with higher credit scores have more flexibility in substituting away from applying for credit than consumers with lower credit scores.”
Credit inquiries for auto lending, revolving credit cards and mortgages fell sharply in March as unemployment surged, according to a Consumer Financial Protection Bureau report.
“This is quite different than mortgage performance during the credit crisis"
An early look at securitized residential home-loan performance amid the coronavirus pandemic indicates encouraging trends thus far in impairment levels of non-qualified mortgages, according to a new report from investor analytics firm Dv01.
"What's going to come out of this is a diamond, what's going to come out of this is a new way to calculate risk."
said RealFormFree CEO Brent Chandler.
The other parts of the Day 1 Certainty program regarding income and asset verifications remain in effect.
Fannie Mae expects the current 7% single-family forbearance rate could more than double over time, even if economic activity was revived as soon as June.
Some benefits are materializing from Fannie Mae's pledge to limit servicers' exposure to principal-and-interest advances the way Freddie Mac does, but counterparties of both GSEs remain exposed to other concerns.
"Our primary focus will be on our operating business, which includes our mortgage origination, servicing and ancillary service business lines."
But Black Knight and Arch Capital's mortgage insurance business aren't as affected, at least so far.
Guild Mortgage’s process for enabling fully digital transactions could serve as a model for mortgage firms struggling to do business in the era of social distancing.
Guild Mortgage's presence in Washington state, the epicenter of the first U.S. outbreak, gave it an early glimpse of the obstacles ahead.
"As states across the country begin to re-open their economies, a silver lining we are seeing is indications of increased activity in the housing market."
The total coronavirus-related mortgages in forbearance grew by 55 basis points, in lockstep with rising unemployment claims, according to the Mortgage Bankers Association.
"Between 53,000 and 102,000 new plans have been put into place over each of the last nine days, and even the largest single-day volume was less than a quarter of what we saw at the start of April – and may see again next week.”
With unemployment mounting, new mortgage forbearance requests could sharply increase in early May when payments are due.
The defect risk index for purchase loans tied its lowest point ever in March at 75, down 1.3% from February and 25% from March 2019.
Less competition in the marketplace meant customers were less apt to fudge the truth on a loan application.
Lenders will get a framework for categorizing eClosing solutions, which can be applied to the vendors you’re evaluating. https://trib.al/UFW0Opz
While the company stated that the coronavirus outbreak "was not the driving force behind this decision," it was highly unlikely in the current economic environment that Mr. Cooper could gain significant traction in a business line to which it was a relative newcomer.
The broker/wholesale business was by far the smallest origination segment for the company.
"The benefits of dense urban areas — like sports, global airports and concerts — have dropped." https://trib.al/7VoEJAq
The S&P CoreLogic Case-Shiller home price index hasn't yet reflected the impact of the coronavirus, but an independent market maker has some thoughts on how it might.
The current effects of COVID-19 and the deeply uncertain times ahead present the "greatest challenge to the housing market in more than a decade."
While Freddie Mac stabilized liquidity in mortgage markets, coronavirus-related credit losses drove the GSE's income down in the first quarter of 2020.
They provide many benefits to mortgage companies that cloud-enabled technologies do not — benefits that are particularly valuable in today's environment.
Almost 10 years after it became the business world's biggest buzzword, cloud technology is everywhere, but few mortgage companies have fully capitalized on its efficiency and flexibility advantages.
"I am very proud of how all our team members rose to the challenge, helping over 194,000 customers initiate pandemic forbearance plans, while at the same time generating very strong operating results for the company."
The first-quarter loss ended a two-quarter profitability streak the company hoped to maintain.
The CFPB is encouraging mortgage lenders to voluntarily tell consumers of their ability to obtain waivers for certain required waiting periods under TRID, which is codified in Regulation Z.
The bureau issued an interpretive rule clarifying that consumers under certain conditions can modify or waive waiting periods required by the Truth in Lending Act and Real Estate Settlement Procedures Act.
"We've continuously been looking at ways to educate the consumer. We're constantly training our staff and working on our scripts to make it as simple and as easy for our customer, speaking in a sympathetic way so they understand they have options."
Jay Bray speaks about the company's experience in working with distressed borrowers going back to the Great Recession.
"Owners of much more expensive homes are seeing a slack in demand, likely because buyers of higher-end homes have been influenced by tight credit for jumbo loans and volatile economic and financial market conditions."
As the coronavirus takes a major toll on housing inventory and credit availability, pent-up buyer demand could lead to market recovery, according to Redfin.
"Due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high."
The coronavirus disruption caused March's pending home sales to fall and the losses will reverberate through the rest of 2020, according to the National Association of Realtors.
CoreLogic expects second quarter revenue of between $420 million and $445 million, projecting that increased refinance activity will provide a cushion for fewer purchase mortgage loans that originators need its services for.
Net income grew by nearly 1,990% year-over-year as its core mortgage services businesses gained scale.
So far, the approximate share of single-family loans that have gone into forbearance as a result of the coronavirus rescue package is 7% but Fannie expects that number to more than double.
Fannie Mae's profitability suffered but it managed to stabilize the mortgage market in the first quarter even with the coronavirus disrupting, among other things, certain credit-risk transfer vehicles it has used.
At some point, "those loans are all going to come due and you are going to need documentation."
The government-sponsored enterprises are focusing on how loans can be repaid after the federal forbearance period ends, and projections for loan modification volumes suggest the larger industry should, too.
“On one hand, they're trying to act in line with their public purpose in buying loans subject to forbearance. On the other hand, they're trying to act like a company in conservatorship by pricing those loans in a way that makes it unattractive.”
Fannie Mae and Freddie Mac are now able to buy loans in forbearance to alleviate pressure on the sector, but the fees charged by the mortgage giants to assume more risk could turn away some originators.
"This analysis highlights the financial tightrope many households walk in our vital service industries.
And if the pandemic were to last beyond the summer, it could have lasting impacts that push many more into housing insecurity."
Mass layoffs and furloughs due to COVID-19 disproportionately affected Asian, black and Latino workers, and, in turn, will impact their housing security the most, according to Zillow.
Chase's move may be the first indication that the entire home equity finance business could be changed dramatically as a result of the pandemic.
Is JPMorgan Chase an outlier or the canary in the coal mine when it comes to home equity lending during the coronavirus spread?
"While the pace of job losses have slowed from the astronomical heights of just a few weeks ago, millions of people continue to file for unemployment. We expect forbearance requests will pick up again as we approach May payment due dates."
The number of loans in forbearance increased by a full percentage point over the past week, according to the Mortgage Bankers Association.
"Despite all of the headwinds, homes continue to be bought and sold, but how will the changing dynamics of supply and demand impact house prices?"
Pre-pandemic, home-buying power was high, but few are likely to buy a home today given a host of uncertainties regarding coronavirus, First American said.
"They're just trying to keep their head above water and don't necessarily have the capacity to start to adopt new solutions at this time."
As lenders scale up on their remote capabilities in response to the pandemic, the software companies that service them see exponential growth.
"The size and depth of the secondary mortgage market are helping to keep rates at record lows. These low rates are driving higher refinance activity and have modestly helped improve purchase demand from their extremely low levels in mid-April."
Mortgage rates fell to their lowest level since Freddie Mac started reporting this data in 1971, as the coronavirus shutdown continued to play havoc with the economy.
"The guidance provides insights the CFPB has gained through years of supervisory and enforcement work to oversee compliance with regulations updated after the financial crisis.”
The bureau said it began developing the standards before the coronavirus pandemic. But more transfers may occur as some servicers struggle to meet their obligations during the economic downturn.
"California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks."
Even though mortgage application volume decreased from one week earlier, lenders had their best week for purchase business since the coronavirus shutdown began, according to the Mortgage Bankers Association.
“They marshalled the facts that helped to support a theory, but omitted the key facts that would show that what they were arguing was misleading.”
The former CEO at The Federal Savings Bank, who faces a bribery charge in connection with loans to President Trump's onetime campaign chief, is seeking to keep evidence from his phone out of the upcoming trial.
“We’re concerned it’s going to be a long, slow recovery. You’ll see a fairly significant number of older, limited-service hotels and retail that just can’t make it."
More details have emerged about the damage the coronavirus pandemic is inflicting on the hospitality industry. One servicer alone has received 2,000 workout requests in the past month.
By refusing to honor contractual obligations to seller/servicers in the conventional market, the GSEs are undermining investor confidence in the world of mortgage-backed securities.
FHFA Director Mark Calabria stated that he was directing the GSEs to "add liquidity" to the markets, but the actions of the FHFA say precisely the opposite.
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Latin Post Voices - Michael Oleaga
33 Whitehall St
The Stuyvesant Spectator Sports Department
345 Chambers St
South Asian Journalists Association (SAJA)
Columbia University Graduate School of Journalism
