Industry Briefs June 16, 2021
FHFA Issues RFI on GSE Executive Compensation
The Federal Housing Finance Agency issued a Request for Input on executive compensation at its regulated entities: Fannie Mae and Freddie Mac and the Federal Home Loan Banks.
The RFI asks 25 questions designed to enhance FHFA’s ability to fulfill its statutory responsibilities to ensure that the regulated entities operate in a safe and sound manner and fulfill their statutory missions while limiting executive officers to reasonable and comparable compensation, considering relevant factors including their status as government-sponsored enterprises, their public missions and their obligation to operate and carry out their activities in the public interest. The last time FHFA reviewed executive compensation at the Enterprises was in 2012.
FHFA invites feedback on all aspects of the RFI within 60 days of publication, no later than August 9. The RFI can be found here.
Fannie Mae: Mortgage Lenders’ Profitability Outlook Tightens
For the third consecutive quarter, an increased share of mortgage lenders expect profit margins to retreat further from last year’s highs, according to Fannie Mae’s Q2 2021 Mortgage Lender Sentiment Survey.
The survey reports 69% of lenders believe profit margins will decrease in the three months ahead compared to 52% in the prior quarter, while 19% believe profits will remain the same and 11% believe profits will increase. Looking at consumer demand over the prior three months, across all loan types, more lenders reported increased demand for purchase mortgages but significantly reduced refinance mortgage demand.
“Despite elevated optimism toward the U.S. economy, lenders show a cautious outlook for their mortgage business,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “With the shift from refinance to purchase business, some lenders commented that purchase transactions are harder to complete and have lower margins.”
Zillow: Zoning Changes Are Most Effective Path to Boost Housing Supply for a More-Balanced Market
A Zillow survey of economists and other real estate analysts finds high costs are expected to slow construction and may lower homeownership among today’s 30-somethings. The panel’s prediction for home price growth is the most optimistic ever in the quarterly survey that dates back to 2010.
The panel expects new construction to slow in the coming years, with high costs as the main barrier. But last quarter, the same panel predicted total inventory would rise later this year thanks mainly to more existing homes being listed for sale. Relaxing zoning rules is what the panel says would be most productive to increase new housing supply.
“Builders will need more than willing buyers to close the massive shortfall since the Great Recession,” said Zillow senior economist Jeff Tucker. “Builders have been firing on all cylinders to meet the excess demand from buyers left unmet by the existing home market, and demand appears poised to stay high for years to come. But they need buildable land, and the panel overwhelmingly pointed to zoning changes as a leading way to move the needle, with the potential to open up enough building capacity to add millions of homes.”
Plaza Home Mortgage Enhances Reverse Jumbo Loan Program
Plaza Home Mortgage, San Diego, enhanced the interest rates and principal limit factors in its Reverse Jumbo program.
Plaza’s program offers private reverse mortgages up to $4 million with no FHA mortgage requirements, fixed rates as low as 5.50% and accepts FICOs as low as 640. In addition, there are no lender fees and the program has no limitations on cash-out or minimum or maximum lump sum payout requirements at the closing. Reverse mortgages may close in as few as 30 days.
Redfin: Demand for Second Homes Cooling to Pre-Pandemic Levels
Redfin, Seattle, said buyers who locked in mortgage rates to purchase a second home nationwide rose 48% year over year in May. Though that’s a significant increase, it’s the first time in a year the annual growth rate has fallen below 80%. Year-over-year increases are likely exaggerated because demand for second homes was relatively low in May 2020 due to the coronavirus pandemic slowing real estate activity.
“In addition to tighter lending rules, vacation-home buyers are starting to react to rising prices,” said Redfin Chief Economist Daryl Fairweather. “Home prices have been climbing rapidly for the last several months, and it seems they’ve finally gotten prohibitively high for some people searching for second homes. Vacation-home buyers are quicker to back away from properties that are potentially overpriced because they’re not a necessity. People searching for primary residences may have to shell out more money than they want to because they need a roof over their heads.”
Mid America Mortgage Securitizes Ginnie Mae eNote with eCustodian Wilmington Trust
Mid America Mortgage Inc., Addison, Texas, completed its first Ginnie Mae eNote transaction with Wilmington Trust, an approved and active eCustodian under Ginnie Mae’s Digital Collateral Initiative.
Wilmington Trust provides full service eNote custodial services, which includes taking in eNotes via the MERS eRegistry, as well as performing a review and certification to the agencies or warehouse lenders, while safekeeping the eNotes on their behalf. In addition, Wilmington Trust provides full-service custodian services for non-agency and non-Qualified Mortgage eNotes.
ATTOM Launches Cloud-Based Platform Providing Access to Its Data
ATTOM, Irvine, Calif., launched ATTOM Cloud, a cloud-based platform that provides immediate access to its curated property data.
ATTOM Cloud allows customers to focus more time on extracting value from property data and less on complex data management processes and infrastructure. Getting started with ATTOM Cloud takes just minutes. Once implemented, ATTOM Cloud takes care of all data updates, so customers can stay focused on their product or analytic projects. Built-in flexibility provides for quick iteration and customer feedback, helping customers to drive additional revenue and lower costs.
AmeriSave Leverages DocMagic Technology to Scale Operations
DocMagic Inc., Torrance, Calif., announced AmeriSave Mortgage Corp. is using its document preparation Total eClose platform to drive digital mortgage efficiency.
DocMagic’s platforms integrate with AmeriSave’s proprietary built loan origination system, which focuses heavily on streamlining the lending process by removing manual touch points using total workflow automation, task management, event triggers, auto calls to vendors and more. Many of DocMagic’s functions automatically occur at the appropriate time within the workflow of AmeriSave’s LOS.
Mortgage Coach Adds Debt Consolidation to Total Cost Analysis
Mortgage Coach, Corona, Calif., added debt consolidation strategies in its Total Cost Analysis presentation, allowing loan originators to educate consumers on lower interest debt repayment options as peaking home equity values offer household cashflow relief.
Mortgage lenders use the Mortgage Coach platform nationwide to create multi-option loan comparisons. Each personalized TCA presentation is delivered to the borrower via digital link by way of email or text, offering the borrower a custom digital experience and an opportunity to make a thoroughly informed decision on their home loan. The added Mortgage Coach debt consolidation illustrations enable loan originators to easily review detailed consolidation scenarios within a borrower’s Total Cost Analysis presentation, including comparisons between a mortgage without debt consolidation, a mortgage consolidating all consumer liabilities and a mortgage with partial debt consolidation, offering both short- and long-term views of interest savings and cashflow impact.
Fannie Mae: Consumer Perception of Homebuying Conditions Worsens as Affordability, Supply Issues Persist
The Fannie Mae Home Purchase Sentiment Index remained relatively flat in May, increasing by 1.0 points to 80.0. Four of the HPSI’s six components increased month over month, most notably the components related to personal finance, as consumers reported a much greater sense of job security and improved household income compared to the same time last year.
However, for the second consecutive month, consumers also reported a significantly more pessimistic view of homebuying conditions; on net, that component fell to an all-time survey low, with only 35% of respondents believing it’s a good time to buy a home, down from 53% in March. Year over year, the HPSI is up 12.5 points.
“Despite the challenging buying conditions, consumers do appear more intent to purchase on their next move, a preference that may be supported by the expectation of continued low mortgage rates, as well as the elevated savings rate during the pandemic, which may have allowed many to afford a down payment,” said Doug Duncan, Senior Vice President and Chief Economist.
Tavant, LoanBeam Partner with Automated Income Calculation
Tavant, Santa Clara, Calif., announced a partnership with LoanBeam, a mortgage technology provider that specializes in data extraction and income calculation, with automated borrower income calculation.
LoanBeam’s APPSolute suite of automated income analysis tools is now integrated with Tavant’s FinConnect, helping lenders close loans faster by standardizing and streamlining the application process, removing human error, increasing transparency and improving accuracy. The integration allows users to simplify the lending process and close loans faster, with the advantage of receiving Representation and Warranty from Fannie Mae and Freddie Mac for select features and functionality. Additionally, Tavant’s Digital Loan Factory now includes LoanBeam’s configurable income analysis services for straight-through processing automated underwriting, drastically reducing the time it takes loan officers, processors, and underwriters to calculate and review borrower qualifying income.
Ncontracts Announces Ngage User Conference
Ncontracts, Brentwood, Tenn., announced the company’s annual user conference, Ngage, and its accompanying hands-on training event, Nstruct, will return as in-person events in 2021. The company had previously cancelled both events in 2020 due to COVID-19 health conditions.
The Ngage user conference will be held this year in Nashville, Tenn., on Sept. 28-29. Nstruct will have two sessions this year: the first will occur in Nashville on September 27, just preceding the company’s user conference; the second will be in San Diego on Oct. 25-26.
CalHFA Launches New Site for Homeowner Assistance Fund Efforts
CalHFA launched a new website to solicit stakeholder feedback on California’s Mortgage Relief program and is also issuing a notice about stakeholder feedback listening sessions and other public comment options.
California’s Mortgage Relief program will use $1.05B in funds from the Homeowner’s Assistance Fund, which was created in the federal COVID-relief bill, the American Rescue Plan Act. Stakeholder feedback and U.S. Treasury’s HAF guidance will inform California’s plan. CalHFA will submit the plan to the Treasury by June 30for review and approval. CalHFA is seeking stakeholder feedback through June 20, by survey, email or listening sessions on June 15 and June 17. Details are available at https://www.calhfa.ca.gov/haf.htm.
MAXEX: Inflation Rears its Head
MAXEX, Atlanta, said inflation continues to be the primary focus for the markets and investors as the Federal Reserve looks to keep a balance between economic stimulation and economic control.
“Demand is far outweighing supply in many sectors of the economy, but none more so than in the housing industry,” MAXEX said in its monthly report. “Home prices have skyrocketed due to high demand, scant inventory, a surge in building materials and costs as well as historically low interest rates. As more buyers get pushed into the jumbo space, we are seeing a move to adjustable-rate mortgages as rates continue to move higher and the difference between ARMs and fixed rates become wider. Refinances slowed down considerably in May as jumbo rates ticked up. Investor demand for high-quality prime jumbo residential mortgage-backed securities continues to drive liquidity as May continued to see a good deal of RMBS activity.”
Black Knight: Forbearances Continue Decline Trend
Black Knight, Jacksonville, Fla., said continuing the trend of early-in-the-month declines, the number of active forbearance plans declined by another 61,000 (-2.9%) last week. As of June 8, 2.06 million (3.9% of) homeowners remain in COVID-19 related forbearance plans including 2.3% of GSE, 6.9% of FHA/VA and 4.4% of Portfolio/PLS loans.
Declines were seen across the board, with loans held in banks’ portfolios or in private label securities seeing the most improvement for the week (-33,000). Black Knight also reported meaningful declines among FHA/VA (-19,000) and GSE (-9,000) forbearance plans over the past seven days.
Grameen America Extends Partnership with Mambu
Mambu, Miami, an SaaS banking and financial services platform, and Grameen America, a microfinance nonprofit organization focused on low-income minority women in the United States, extended their partnership for an additional five years to meet Grameen America’s aggressive growth plan including scaling its operations to invest $12 billion in loans to more than 500,000 minority small business owners across 49 branch locations. Currently, Grameen America has invested over $1.8 billion in more than 135,000 low-income women entrepreneurs since opening in January 2008.
In 2013, Grameen America and Mambu partnered to replace the lender’s custom-built legacy system with a modern, cloud-native platform that would enable the organization to rapidly scale and streamline operations and be accessed from a mobile device, providing an enhanced user experience. Grameen America strategically rolled out Mambu’s platform region by region, completing the national launch over the course of nine months.
ICE Mortgage Technology Acquires eVault Technology from DocMagic for Encompass eClose
ICE Mortgage Technology, Pleasanton, Calif., will deploy an eVault platform for secure storage of digital mortgages and notes, based upon technology acquired from DocMagic Inc., Torrance, Calif.
The eVault technology will be integrated into ICE’s mortgage closing platform, Encompass eClose, which enables lenders to electronically facilitate every aspect of the eClosing workflow, from ordering documents to delivering loans to investors – and all steps in between – without ever having to leave Encompass.
Redfin: Pending Sales Continue to Slow—Still Up 29% from 2020
Redfin, Seattle, said the breakneck pace of the housing market is beginning to slow heading into June, with leading indicators of activity now mostly cooling off instead of continuing to heat up.
Redfin said adjusted for seasonality, home purchase applications have been falling since late March and are now 7% below their average levels in January and February 2020, despite low mortgage rates and easing access to credit. The cooling market is also reflected in a four-week decline in pending sales and a drop in Redfin’s demand index, which is down 12% from its late-March peak.
Redfin Lead Economist Taylor Marr said taken as a whole, the data paint a picture not of a bursting bubble, but a clear change from the overheated spring market. “Homebuyers may have found a better way to spend Memorial Day weekend than touring homes, but most have not exited the market entirely,” he said. “Buyers have faced a tough market this year and fewer feel it is a good time to buy as the allure of low rates has waned, so some are choosing to wait it out for now. With demand stabilizing, the housing market should become more balanced, allowing homebuyers to have a less stressful and challenging time finding and competing for a home.”
Radian Launches Title Insurance, Closing Services
Radian Group Inc., Philadelphia, launched titlegenius by Radian, a direct-to-consumer service that provides a way to order title insurance and closing services online.
At www.mytitlegenius.com, consumers will have access to Radian’s blockchain-enabled online portal that enables them to shop for and save on title and closing services directly. The portal provides tools that range from remote check capture to online notarization, enabling homebuyers to proceed through the closing process. titlegenius is offered through homegenius by Radian, a suite of digital products and services.