Industry Briefs Dec. 1, 2020
Fitch U.S. Title Insurance Performance Sustained, Despite 2021 Uncertainty
Fitch Ratings, Chicago, said while the ongoing coronavirus pandemic has negatively impacted the broader economy, the title insurance industry remains positioned for favorable margins with positive housing and mortgage market fundamentals heading into 2021.
Fitch’s title insurance market fundamental sector Outlook is “Stable” for 2021. “Title insurers benefit from favorable profit margins, very strong capital, conservative asset allocation and macroeconomic variables that are supportive of another year of strong operating performance,” said Gerry Glombicki, Director in Fitch’s Insurance Ratings Group. “Claims experience also continues to trend favorably, and 2020 will be the fifth consecutive year with an annual loss ratio below 5%.”
The report said the strength of the economic recovery amid the ongoing coronavirus pandemic remains a source of uncertainty for title insurers as revenues remain vulnerable to declines in employment and economic activity. Title insurers are currently better prepared for economic volatility versus the 2008 recession based on capital strength, solid reserve positions and operating efficiencies gained from technology investments.
Commercial real estate transactions have buoyed title insurer revenues for the last several years, and continued to make a material impact to large underwriters in 2020 even as originations declined dramatically. Loan originations in 2021 are expected to increase slightly relative to 2020, although are expected to remain well below their peak in 2019.
AI Reveals Racial Disparities in NYC Homeownership
SAS, Cary, N.C. said its analysis powered by artificial intelligence revealed racial disparities in homeownership, home loans and foreclosures in NYC. The analysis showed neighborhoods with a higher proportion of Black and Hispanic homeowners have lower home values even when home age and square footage are the same. Additionally, the findings revealed that the total cost of acquiring home purchase loans is higher for Black and Hispanic borrowers than for other races, even when controlling for differences in down payment and home value.
The analysis was made possible through a collaboration between SAS and the Center for NYC Neighborhoods. The work is central to the Black Homeownership Project, an initiative from the Center for NYC Neighborhoods, which is helping advocate for policies that break down barriers and close the racial wealth gap.
The report noted in the decade that followed the 2008 financial crisis, Black homeownership in New York City dropped considerably: there were at least 20,000 fewer Black homeowner households in 2017 than there were in 2005. “With the devastating economic impacts of the COVID-19 pandemic, compounded by historic barriers to Black homeownership, this rate could drop even more,” the report said. The report can be accessed at https://blogs.sas.com/content/sascom/2020/11/20/center-nyc/.
CSI Partners with Featurespace for Anti-Money Laundering Platform
Computer Services Inc., a provider of fintech and regtech platforms, partnered with Featurespace, a provider of Enterprise Financial Crime prevention software, to launch a holistic anti-money laundering platform, WatchDOG AML.
WatchDOG AML protects against financial crime by identifying suspicious activity in real-time with an enterprise transaction monitoring system. Using customizable machine learning models that utilize Featurespace’s Adaptive Behavioral Analytics, WatchDOG AML reduces false positives while predicting and adapting to new threats through anomaly detection. This allows banks and payments providers to detect more suspicious activity as it happens, while also reducing the number of genuine transactions declined.
Black Knight: Loans in Forbearance Up 27,000
The latest Black Knight Blog reported mortgages in active forbearance saw another slight increase last week, increasing by 27K from last Nov. 23. The week’s rise was a result of a 17,000 increase in FHA/VA forbearances along with a 10,000 increase among loans in private-label securities or banks’ portfolios, while GSE forbearances remained flat week over week.
Despite the increase, the number of active forbearances remains down 7% (-207,000) from last month, roughly equivalent to the declines seen in August and September. As of November 23, Black Knight reported 2.78 million homeowners in active forbearance plans, representing 5.3% of all active mortgages, up from 5.2% from last week. Together, they represent $564 billion in unpaid principal.
CFPB Launches New Website for Interactive Enforcement Database
The Consumer Financial Protection Bureau launched a refresh of its public website, www.consumerfinance.gov. The updated website features additional user functionality, an improved layout, more content and easier access to information. The refresh also includes a new interactive enforcement database to help the public track the Bureau’s enforcement actions.
The website will include the following enhancements: an Interactive Enforcement Database; a Page for Petitions; and archiving of Older Content.
Gateway Selects IndiSoft’s RxOffice Vendor Management System
Gateway Mortgage, Jenks, Okla., selected IndiSoft LLC’s RxOffice Vendor Management System to support its third-party vendor risk management process.
RxOffice’s VMS SaaS version enables users to manage vendors effectively and efficiently. Starting as early as the nondisclosure agreement execution and pre-approval due diligence continuing through the request for proposal, contract negotiation, cyclical audits, risk-based performance reviews and termination or renewal the platform’s rules-based workflow and multiparty flexibility ensures compliance and minimizes costs.
First American: Faster Home Price Appreciation Erodes Affordability
First American Financial Corp., Santa Ana, Calif., released its monthly First American Real House Price Index, noting housing affordability declined nationally in September for the second straight month.
“Rising house-buying power drives greater demand, and surging demand in a supply-constrained market fuels faster nominal house price appreciation,” said First American Chief Economist Mark Fleming.
Of the 50 markets First American tracks, affordability declined in 41 month over month. The index reported real house prices increased 0.78 percent between August and September. Year over year, real house prices declined 5 percent. Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 0.79 percent between August and September and increased 15.9 percent year over year.
Community State Bank Implements Paperless eClosing Process with DocMagic’s Total eClose Platform
DocMagic Inc., Torrance, Calif., announced Wisconsin-based Community State Bank implemented its full suite of eClosing platforms to transform the bank’s mortgage closing process, making it 100 percent digital. All seven locations of Community State Bank have now implemented DocMagic’s Total eClose platform and are closing and funding residential home loans electronically.
Community State Bank is leveraging DocMagic’s document generation capability to ensure consistency and compliance of Loan Estimates and Closing Disclosures, eSignatures, eNotarizations in all 50 states and eDelivery to investors/GSEs. Total eClose also generates a MISMO Category 1 SMARTDoc eNote and has direct connectivity with the MERS eRegistry. The entire process includes a detailed audit trail, with secure storage in DocMagic’s certified eVault. Collectively, DocMagic’s Total eClose platform creates a fully paperless workflow that seamlessly integrates every component of the closing process.
ATTOM: Winter Home Sales Yield Best Bargains for Buyers
ATTOM Data Solutions, Irvine, Calif., released its annual analysis of the best days of the year to buy a home, which shows that days that fall in December and January offer homebuyers the best deals.
According to the analysis, buyers who close on December 4 or January 26 will get the best deal and pay exactly market value for a property, as opposed to above market value in an extremely competitive market that has been on the rise. This analysis of more than 27 million single family home and condo sales over the past seven years is evidence of the continuation of a hot sellers’ market.
Redfin American Suburbs Have 15% More People of Color Than Decade Ago
Redfin, Seattle, said the American suburbs have become more racially and ethnically diverse and more Democratic over the past decade. Key findings include:
• People of color made up 28% of the suburban population nationwide in 2018, up from 26.2% in 2010, driven by 15.3% more people of color living in the suburbs over that time period. People of color made up 37.6% of the city population nationwide in 2018, flat from 37.7% in 2010; 5.2% more white people live in the suburbs than a decade ago.
• People of color made up 40.2% of the suburban population of Las Vegas in 2018, up from 30.5% in 2010, the biggest increase of any major U.S. metro. It’s followed by Salt Lake City and Seattle.
• The Democratic presidential candidate won by 13.2 percentage points in the suburbs in 2020, up from 7.2 points in 2016 and 5.9 points in 2012. In cities, the Democratic presidential candidate won by 14.7 points in 2016 and 14.9 points in 2012 (full 2020 data for cities was not yet available for this report).
• Price per square foot of homes in the suburbs increased 5.3% year over year in the third quarter of 2020, compared with 4.2% in the third quarter of 2019. In urban areas, price per square foot rose 5.3% year over year in the third quarter, compared with 5.4% in the third quarter of last year.
• The suburbs are becoming denser; the number of people per square mile grew 5.1% from 2010 to 2018. In cities, the number of people per square mile grew 4.4% over the same time period.
• 36.8% of women living in the suburbs were “suburban housewives” in 2018, down from 39.5% in 2010. 32.8% of women in cities were “housewives” in 2018, down from just 35.4% in 2010.
Redfin: Condos Selling for a Record 17% Discount to Single-Family Homes as Coronavirus Fuels Demand for Space
Redfin, Seattle, said the typical single-family home that sold in the U.S. this year was purchased for an average of 17.3% more ($58,000) than the typical condo. That’s up from 15.4% last year and represents the largest premium since at least 2013, when Redfin began recording this data.
Redfin said the median sale price of single-family homes surged 15.5% year over year in October, outpacing the condo market’s 9.9% growth. Condos are also taking longer to sell—the typical condo spent 36 days on the market last month, compared with 27 days for the typical single-family home. And less than a quarter (22.8%) of condos sold for more than their listing price, compared with 36.6% of single-family homes.
Purchases of condos, however, have been catching up. In October, condo sales rose 22.7% from a year earlier on a seasonally adjusted basis, following a 50% plunge in the spring. That’s on par with the 23.3% growth in sales of single-family homes last month.
“Condos sales are rebounding because buyers are finding great deals,” said Redfin Chief Economist Daryl Fairweather. “Families are fleeing cities in search of more space in the suburbs, which has presented an opportunity for millennials who are looking to become homeowners but don’t need extra bedrooms or a backyard.”
Hogan Lovells/CAPCO Webinar on Loss Mitigation Dec. 9
CAPCO, Charlotte, N.C., and law firm Hogan Lovells will hold a webinar on Wednesday, December 9 to discuss on market-related forecasts, strategies and compliance concerns impacting the real estate finance industry.
Featured topics include an overview of the current landscape and CARES Act impacts on the mortgage servicing market and the short and long-term mortgage servicing market implications; a discussion on loss mitigation forecasting; proposed mortgage servicing portfolio strategy solutions; mortgage servicing bank technology solutions; a discussion and forecast of the new Congress related to housing finance; and pressing regulatory compliance and examination topics regarding the CARES Act and loss mitigation.