Category: Mortgage News

The number of loans in forbearance dropped by 83,000 over the last week. This is on top of a 71,000 loan reduction during the first few days of August. Black Knight reminds that this type of change is typical at the beginning of each month as servicers conduct three month reviews of homeowners to determine if their forbearance plans will be extended. As of August 10, 1.74 million homeowners, 3.3 percent of those with a mortgage, remain in COVID-19 related plans, the first time the number has fallen below 1.8 million. The numbers improved for all loan types. There was a reduction of 43,000 (-7.8 percent) in loans serviced for bank portfolios and private label securities (PLS), leaving 3.9 percent of those loans in forbearance.  The number of GSE (Fannie Mae and Freddie Mac) loans fell by 15,000 and FHA and VA loans by 25,000. This leaves 1.9 percent of GSE and 5.8 percent of FHA/VA loans in forbearance.

Even though lumber prices have recently declined, the National Association of Home Builders (NAHB) says builders are facing some of the fastest increases of other building material costs in history. The latest Producer Price Index (PPI) from the Bureau of Labor Statistics (BLS) shows an 0.2 percent increase in the prices of goods used in residential construction (with the exception of food and energy costs) in July. Those costs had increased 3.0 percent in June. David Logan posted in NAHB’s Eye on Housing blog that the BLS index shows those building costs have declined only twice since December 2019 and have climbed by 19.4 percent over the past 12 months. As an aside, when food and energy are included, the index is up 22.3 percent year-over-year.

All but one of the 183 metropolitan housing markets tracked by the National Realtors Association® (NAR) posted annual price increases in the second quarter of 2021. Twelve of those areas had appreciation that exceeded 30 percent. The median price of a single family home rose 22.9 percent to $357,900. This translates to an increase of $66,800. All four major regions had double-digit gains and for once the highest growth was not in the West. In the Northeast, where Pittsfield, Mass led with a 46.5 percent increase, the highest in the nation, prices were up 21.8 percent. It was followed by the South, up 21.0 percent; the West at 20.9 percent, and the Midwest with 17.1 percent appreciation. Home price gains and the accompanying housing wealth accumulation have been spectacular over the past year, but are unlikely to be repeated in 2022,” said Lawrence Yun, NAR chief economist. But he added, “There are signs of more supply reaching the market and some tapering of demand. The housing market looks to move from ‘super-hot’ to ‘warm’ with markedly slower price gains.”

It has been under discussion for what seems like forever, but Fannie Mae will begin to recognize non-reported types of credit performance in qualifying a loan. On September 18, it will launch a new feature in its automated underwriting system that will incorporate consumers’ rent payments in credit evaluations. The process, which will require borrower consent, will enable single-family lenders to automatically identify recurring rent payments on an applicant’s bank statements. The company says its new Desktop Underwriting (DU) enhancement creates new opportunities for homeownership for qualified renters with limited credit history but a strong rent payment history while still promoting safe and sound lending, Only consistent rent payments will be considered. Any records of missed or inconsistent rent payments identified in the bank statements will not negatively affect the applicant’s ability to qualify for a loan sold to Fannie Mae. Rent payments that appear in the payment history of the borrower’s bank account data can be identified, whether made via check or electronically, such as via a company’s payment portal or other digital payment solution.

In late June the Consumer Financial Protection Bureau (CFPB) announced amendments to federal mortgage servicing regulations to “help protect mortgage borrowers from unwelcome surprises as they exit forbearance.” Those changes don’t take effect until August 31 but, with early entrants to the program nearing the end of their 18 month eligibility for forbearance, CFPB has issued what could be considered a report card on servicer performance thus far in the pandemic. CFPB surveyed 16 large servicers, looking at their call management and handling of delinquency rates. Call management reflects how well servicers are dealing with the volume of homeowner calls.  This includes the Average Speed to Answer (ASA) and Abandonment Rates (AR), a measure of how many borrowers disconnect from servicing calls prior to completion. Most servicers reported abandonment rates of less than 5 percent during the reporting period, while others exceeded 20 percent, and one peaked at 34 percent.