Industry Briefs Sept. 26, 2022: CFPB Annual Report Shows End to Refi Boom, Rise in Home Purchase Loans

CFPB Annual Report of 2021 Mortgage Market Activity Shows End to Refi Boom, Rise in Home Purchase Loans

The Consumer Financial Protection Bureau released its annual report on residential mortgage lending activity and trends for 2021. The report shows a shift from refinance loans in 2020 to home purchase loans in 2021, with a greater share of home purchase loans going to Asian, Black and Hispanic white borrowers relative to the share of home purchase loans for non-Hispanic white borrowers. The top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending – a trend that has risen each year since 2018.

The report said the increase in mortgage originations was driven by home purchase loans as refinance loans fell: Closed-end mortgage originations, excluding reverse mortgages, increased in 2021 by 2.4%, from 13.4 million in 2020 to 13.7 million. While the 66.8% increase in originations from 2019 to 2020 was largely driven by refinances, most of the increase from 2020 to 2021 was due to jumbo home purchase loans. In fact, non-cash-out refinance loans began decreasing following a peak in March 2021.

The report also noted the number of mortgage lending institutions reporting HMDA data dropped in 2021: At least one closed-end mortgage loan had been reported by 4,332 financial institutions, down by 3.1% from 4,472 financial institutions in 2020. The top 25 closed-end lenders by loan volume held a combined market share of 43.9%, which has risen yearly since 2018. The top 25 mortgage lenders by loan volume were particularly prominent in the refinance market, accounting for 53% of all refinance loans.

True Publishes Three New Blogs

True, Forest Hills, N.Y., published three new blogs to its website on mortgage technology.

The blogs are

Mortgage Industry IT Leaders are the First to Decide if Technology can be Trusted

Lending Intelligence is Helping to Improve Quality and Cut Costs in Loan Manufacturing

Relieving the Data Supply Chain Bottleneck in Mortgage Loan Manufacturing

HUD Awards $1.4 Million for Research on Renter Outcomes During Disaster Recovery

HUD awarded $1.4 million in funding for research on outcomes of renter households during various phases of disaster recovery. Two awardees, The Urban Institute and Horne LLP, will receive the funds under the Notice of Funding Opportunity.

CDBG-DR funds support long-term recovery after large disasters and are targeted toward the most heavily impacted and distressed areas. Providing funds for disaster research studies is extremely important to future policy recommendations and improvements to future recovery efforts.

VantageScore Launches RiskRatio

VantageScore, Stamford, Conn., launched RiskRatio, which provides lenders and those in the capital markets the ability to view and refresh the relationship between credit scores and default levels (measured by delinquency of 90 days or more over a 24-month period) at different points in time for originations as well as existing accounts.

By using the tool, these stakeholders can see that consumers in the near prime 621-640 credit score band had a 55% decrease in default risk when comparing the sample population from March 2009 (stress period) to March 2020 over the 24-month performance window in each period. This information provides stakeholders important insights to help manage their portfolio risk. 

Users can select the periods (which can include a “stress period” benchmark), product (credit card, auto loan, mortgage, or personal loan) and whether the product is a new origination or an existing account. The tool then displays the score-to-risk (probability of default) relationship by 20-point bands and graphs it. Multiple time periods can be selected for side-by-side comparison of vintage views, which is a feature that can help capital markets’ participants understand how shifts in the risk that a VantageScore credit score represents may impact their portfolio mix.

Staircase Launches Product to Automate Non-Delegated Mi Underwriting 

Staircase, New York, launched MI Underwriting, a tool that gives private mortgage insurers the ability to automate underwriting of non-delegated mortgage insurance policies for lenders instantly and at half the typical cost.

In the delegated channel, the lender underwrites the loan for MI and then submits it to the mortgage insurer. With non-delegated MI, lenders typically submit a full package of information from the borrower—including pay stubs and tax returns—to the insurer who then processes the information manually to make an underwriting decision according to its guidelines.

Infima Expands Coverage to Ginnie Mae MBS

Infima, San Mateo, Calif., a fixed-income predictive analytics provider, expanded its coverage of mortgage securities to bonds backed by government agency Ginnie Mae.

This expansion beyond Fannie Mae and Freddie Mac MBS completes Infima’s coverage of a major fixed-income asset class with a current market value of more than $10 trillion. It extends Infima’s advanced prepayment projections and analytics to an additional 200,000 securities, bringing total coverage to more than 525,000 Agency MBS backed by 35 million home loans. Integrates with First American Title’s PRISM Platform for Secure Transaction Funding, Charlotte, N.C., integrated with First American Title Insurance Co.’s PRISM digital platform for title agents.

The PRISM platform, which combines automation and marketing tools, allows First American policy-issuing title agents to offer valuable products and services directly to their customers via any computer or mobile device at any time. The integration with the PRISM platform enables both title and real estate agents to request and receive earnest money and cash-to-close funds from home buyers once a buyer estimate is prepared. By allowing title and real estate agents to trigger funding requests within the same platform, the PRISM platform helps enhance the efficiency of the settlement process.

Ginnie Mae Publishes FAQ Following Release of Updated Minimum Issuer Eligibility Requirements 

Ginnie Mae published a set of “Frequently Asked Questions” to address the inquiries received during the agency’s one-on-one conversations with the industry since the updated minimum independent mortgage bank eligibility requirements were announced in August.

“Since announcing these updated standards, Ginnie Mae has actively engaged with Issuers and stakeholders who have questions,” said Ginnie Mae President, Alanna McCargo. “We are taking this opportunity to provide additional clarity around our approach. While the overwhelming majority of Ginnie Mae Issuers are compliant with these requirements today, we will continue engaging with our Issuers throughout the implementation period to ensure our program guidelines support a strong and vibrant source of housing finance liquidity.”

The FAQs can be found here.

Indecomm Launches Enhanced Version of AuditGenius

Indecomm, Edison, N.J., launched its next-generation version of its loan quality control technology, AuditGenius. The upgraded version leverages the company’s “Genius” tech stack, an interconnected and proprietary blend of technology, to help AuditGenius users to meet exceedingly stringent QC requirements while significantly reducing the need for excessive manual reviews and re-reviews.

AuditGenius adheres to investor requirements and reduces heavy-touch, redundant and manual QA. The technology and automation features used in the next generation of AuditGenius derive from Indecomm’s DecisionGenius automated underwriting platform.

CFPB Launches Effort to Spur New Opportunities for Homeowners in Mortgage Market

The Consumer Financial Protection Bureau asked for public input on ways to spur new mortgage products that help households.

The CFPB seeks insights on ways to improve mortgage refinances for homeowners who would benefit from refinancing, especially for borrowers with smaller loan balances. The agency also seeks public input on ways to support automatic short-term and long-term loss mitigation assistance for homeowners who experience financial disruptions. The CFPB will use this information as it considers steps to support household financial stability and address refinance market gaps. Today’s initiative is part of a broader CFPB effort to promote competition and innovation in consumer finance markets.

Link: Request for Information Regarding Mortgage Refinances and Forbearances. Deadline for submitting comments is 60 days after publication in the Federal Register.