11 million households fell behind on rent or mortgages in second quarter


In the second quarter of 2020 nearly 11 million households fell behind on their rent or mortgages – however nearly triple that number, approximately 30 million individuals, missed at least one student loan payment, according to a recent report from the Mortgage Bankers Association’s Research Institute for Housing America.

The data compiled from the Understanding America Study was the result of a panel survey tailored to study the impact of the pandemic specifically on mortgagors, renters and student loan borrowers.

According to the survey, evidence suggests that student debt is affecting housing-market behavior, in particular, how rising student debt burdens may have crowded out first-time-home purchases among Millennials.

Every additional $1,000 of student debt lowers the homeownership rate by approximately 2% – a sizeable effect, according to the report. This bolsters the findings of other studies, including a 2017 study by the National Association of Realtors where more than 75% of respondents with student loans said their educational debt impacted their decision to purchase a home.

Over the span of the second quarter, 5% of mortgagors missed one payment, 2.8% missed two payments, and 3% missed all three payments. Student loan borrowers, however, struggled to make payments more than mortgagors and renters – while 9.3% of student loan borrowers missed one payment over the quarter, 16.4% missed two payments, and 12.9% missed all three payments.

“In the pandemic, missed student loan payments or deferrals could adversely affect the ability in the future for younger households to enter the housing market or slow the climb of the housing ladder,” the release said.

Through the second quarter, 65% of borrowers reported receiving permission from their lender to delay or reduce their monthly payment – though only 57% took the offer. Nearly a third, 30.6%, of those who did receive permission missed a payment.

By race and ethnicity, the percentage of borrowers reporting missed student loan payments was on average over the quarter 54.5% for Blacks, 49.7% for Latinx, 45.0% of Asian/Hawaiian/Pacific Islanders, 44.4% for Whites, 42.3% for White Non-Latinx and 37.1% for Native Americans, the report said.



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NAR: 31% of Realtors say they feel unsafe at open houses


Real estate agent safety has been a concern for years, as the job requires showing empty homes or homes occupied by others, and meeting new people, often alone.

As September is Realtor Safety Month, the National Association of Realtors has released its 2020 Member Safety Report.

According to the report, 31% of Realtors said they feel unsafe during an open house or showings, and 27% said they feel unsafe when meeting a new client for the first time at a scheduled location or property.

Those fears are not unfounded. Just this week, NAR reported that a real estate agent in Draper, Utah, was showing what she thought was a vacant house for sale to a potential buyer. Behind one locked bedroom door in the basement, however, they found a man holding a rifle, according to police reports. The man allegedly told the agent and potential buyer to get off the property.

Realtors also have to contend with the people they allow into house. While conducting an open house, 3% reported theft of prescription drugs and 32% reported theft of opioids. While giving a home tour, 2% reported theft of prescription drugs and 16% reported theft of opioids.

Thirty-five percent reported they encountered a crime after receiving a threatening or inappropriate email, text message, phone call, or voicemail, and 17% said they encountered a crime during an open house.

Fear for their personal safety or safety of their personal information was a common concern, with 35% of female Realtors in suburban or metro/urban areas saying they had this fear.

This year, more female Realtors are carrying self-defense weapons or tools than last year – in 2020, 50% of women are carrying a self-defense weapon or tool while 46% of male Realtors do the same. In 2019, it was 49% of female Realtors and 45% of male Realtors.

Seventy-two percent of Realtors said that they have personal safety protocols in place that they follow with every client.

More agents are sharing their whereabouts with others than last year in total – 58% of members said they use a smartphone safety app to track where they are and share their location with colleagues. Most commonly, 36% used the Find My iPhone feature. The report said that 64% of women are more likely to use an app or safety notification procedure, compared to 47% of men.

NAR offers a Realtor safety course, which 29% of the Realtors said they have participated in. Women were more likely to take the course, at 33%, while 21% of men took it. Of those who have taken the course, 79% said they feel more prepared for unknown situations after taking it.



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Mortgage forbearances drop 22% from May peak


There are 3.7 million U.S. homeowners with mortgages in forbearance this week, down 22% from May’s peak of 4.7 million, Black Knight said in a report on Friday.

The total weekly drop was 66,000 loans, a slower pace than the decline of 150,000 in the prior week, the report said. Measured as a share of all mortgages, 7% of home loans are in forbearance, down from 7.1% in the prior week, Black Knight said.

The forbearances rate for mortgages backed by Fannie Mae and Freddie Mac, known as government-sponsored enterprises, is 5% this week, down from 5.1% last week, the report said.

The rate for home loans in Ginnie Mae securities, primarily mortgages backed by the Federal Housing Administration or the Veterans Administration, is 11.3%, down from 11.5%. The forbearance share for mortgages held in bank portfolios or in private-label bonds is 7.4%, down from 7.5%.

“We’re seeing a bifurcation in the numbers, with GSE forbearances lower than the rates for the Ginnie space and the private-label space,” said Walt Schmidt, FTN Financial’s head of mortgage strategy.

The overall number of mortgages in forbearance has dropped as the jobs market gained, Schmidt said.

The unemployment rate in August was 8.4%, the lowest level since March. In April, the rate reached 14.7%, the highest in a Labor Department data series that goes back to 1948.

While the economy has added 10.6 million jobs since April, it’s not even halfway toward replacing the 22.2 million jobs lost between February and March, according to government data.

Most economists are predicting the soft jobs market will persist into 2021. Fannie Mae Chief Economist Doug Duncan forecasts the unemployment rate will average 8.8% in 2020 and 7.1% next year.

The CARES Act passed by Congress at the end of March gave mortgage borrowers the option of suspending their monthly payments for up to 12 months because of the pandemic. Borrowers just have to attest to their mortgage servicer that they have experienced a financial loss because of the health crisis.



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So you want to eClose a mortgage in Florida?


eClose Florida

If you were closing on a mortgage in Florida, it wouldn’t matter if it was 1950 or 2019 — the closing process was exactly the same, according to Title ClearingHouse of Jacksonville President Valerie Saunders. Then, 2020 changed everything.

“I got into this business over 20 years ago, and it really had not changed for the last 20 years until remote online notarization and hybrid closings came around,” Saunders said.

eClosings are all the rage as stay-at-home orders and fears of the pandemic are keeping Americans in their homes and avoiding any unnecessary travel.

But for those wanting an eClosing – that is easier said than done. One of the greatest obstacles is the acceptance of remote online notarization (RON), both at the regulatory and business level. While growing in popularity, RON is still a slow process and only recently became accepted by many states because of the pandemic.

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Why is the housing market thriving in a pandemic?


The deadliest pandemic in more than a century has failed to derail the housing market because of the lowest mortgage rates ever recorded coupled with a shift in how people use their homes.

“The buyers are coming in because of the low interest rates – that’s the No. 1 reason,” said Lawrence Yun, chief economist of the National Association of Realtors said in an interview with HousingWire. “The secondary demand is coming from the work-at-home phenomenon that has people looking for bigger homes and caring less about commuting time.”

People now see their home not only as a place to live, but as a shelter during a national health crisis, Yun said. It’s also an office and, for families with children, often a part-time school.

Mortgage rates began tumbling in mid-March after the Federal Reserve announced it would buy mortgage bonds and Treasuries to keep credit flowing amid the pandemic. It was similar to a fixed-asset program it created during the financial crisis a dozen years ago.

The average U.S. rate for a 30-year fixed mortgage has been under 3% since late July, as measured weekly by Freddie Mac. When Fed Chairman Jerome Powell announced in March the Fed would purchase bonds, it was 3.65%.

Existing-home sales jumped 25% to a seasonally adjusted annual pace of 5.86 million in July, NAR said in an Aug. 21 report. It was the highest sales level since 2006 and the biggest monthly increase on record. The prior record for a monthly gain was the 21% jump seen in June, according to NAR data.

The supply of homes on the market was the lowest for any July since NAR started tracking the data about five decades ago, Yun said.

In the first months of the pandemic, Yun projected home sales in 2020 would see a 15% decline. After the Fed’s actions began driving down mortgage rates, he changed the estimate to a 7% decline.

Last week, Yun issued his latest monthly forecast that said existing home sales in 2020 likely will total 5.4 million, a gain of 1.1% from last year. Sales of new houses probably will rise 17% to 800,000, Yun said.

“We missed the spring buying season because of the pandemic, but the second half of the year looks quite dazzling,” Yun said.



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Housing cliff meets fiscal cliff with COVID-19 relief delayed


The so-called housing cliff, referring to the expiration of programs in the CARES Act keeping people in their homes, is about to meet the government-funding cliff, as the Sept. 30 end of the federal fiscal year sometimes is called.

White House Chief of Staff Mark Meadows said Wednesday he is not optimistic about reaching a new coronavirus relief deal before the end of September, predicting House Speaker Nancy Pelosi will use the government funding cliff at the end of next month as leverage to strike a deal on pandemic aid,” a Politico story said.

The House of Representatives passed the Heroes Act at the end of May to provide funding to states overwhelmed with pandemic costs, extend the eviction moratorium in the CARES Act, and continue providing jobless Americans with a $600 a week enhancement to unemployment benefits to keep them current on bills such as mortgage and rent.

The Senate ignored the House’s $3 trillion act, proposed a $1 trillion bill of its own that never made it to the floor to be debated because it lacked Republican support, and then went on its August summer vacation without passing anything.

“It’s really been Speaker Pelosi really driving this train as a conductor more so than really anybody,” Meadows told Politico. “And I think privately she says she wants a deal and publicly she says she wants a deal, but when it comes to dealing with Republicans and the administration, we haven’t seen a lot of action.”

President Donald Trump signed an executive order and three memorandums in a ballroom of the Trump National Golf Club in Bedminster, New Jersey, on Aug. 8 that he said would give Americans the help that Congress had failed to provide.

But, the executive order he signed, touted as an extension of the eviction moratorium in the CARES Act that expired in July, only directed various federal departments and agencies to “consider” and “review” ways to keep renters in homes using existing government programs.

Another directive the president signed would provide a $300 a week extra payment for people receiving unemployment benefits – originally, it was $400 with the requirement that states kick in $100, but that provision was later walked back. The money is coming from a Federal Emergency Management Agency fund intended for hurricane relief.

FEMA has approved about 35 states to offer the “lost wages assistance” that amount to half the $600 a week aid in the CARES Act that expired July 31. Fewer than half a dozen states have completed the rejiggering to their benefits systems required so they can send the checks from the FEMA fund.

Pelosi has said the way to reach a compromise between the House’s $3 trillion bill and the Senate’s $1 trillion proposal is to split the difference: Pass a $2 trillion bill. At a press conference on Thursday, she said the Senate’s proposal lacked enough funds for schools dealing with the pandemic, housing, and other needed aid.

“We have said to them, `We’re willing to meet you in the middle.’” Pelosi said. “We have a pandemic, and they’re coming in with an eyedropper.”



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Refi fee is delayed, but what are lenders doing about already locked loans?


The Federal Housing Finance Agency announced on Tuesday it is delaying the implementation of its adverse market refinance fee to Dec. 1 – three months past its intended start date. But what about lenders whose refi loans were locked with closing dates after Sept. 1 and carrying the 50bps LLPA?

Phil Shoemaker, president of originations at Home Point Financial, said that for every Home Point borrower who had the adjustment added, the fee will be removed. However, with several thousand loans in the pipe, it does require staff to go in and manually touch every single loan to reverse the fee.

According to Home Point, the adjustment has been removed from the pricing for new locks as long as the term does not have a lock expiration date greater than Nov. 15, 2020.

“There are loans that are locked on a 90-day or so lock, where the lock is actually long enough that by the time the loan delivers the fee will be in place. So, we’ve identified a cut off where if the lock expiration is past this point the fee will apply,” Shoemaker said.

Home Point will credit its wholesale and correspondent clients the 50-basis point adverse market fee for loans locked between Aug 13. And Aug 15., unless the loan has already been purchased.

United Wholesale Mortgage sent an internal letter to its community that stated in most cases, it will be able to return the money to borrowers. How it is able to make the 50bps adjustment depends on the current status of the loan.

For those not locked, the adjustment is off the rate sheet until further notice. For those that are locked and not yet approved with conditions (AWC) or locked and in AWC, UWM removed the 50bps adjustment. Loans cleared to close or those already in closing but desire to remove the 50bps were encouraged to contact the Lock Desk immediately. In those cases, borrowers will be made aware that docs will have to be redrawn and the closing will be delayed.

Brian Covey, vice president of regional production at loanDepot, said the lender removed the 50 bps LLPA on conventional refinances as soon as the extension was announced.

“It varies on the current pipeline as some refinance customers with conventional financing were not locked so we are obviously encouraging them to lock given this info and based on their situation,” Covey said.

While the adverse-market fee came off as a shock to some mortgage originators, and experienced push back from several in the industry, the GSEs’ responded that that the “modest fee” would help the enterprises assist families during the pandemic.

But with rates continuing to hover below 3% and demand refusing to slow down, some lenders were in agreement that the industry will have to brace itself for the fee sooner or later.



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Opendoor launches… a brokerage? – HousingWire


The line between traditional iBuyer and brokerage is getting ever-so-blurry for venture-backed startup Opendoor.

The company, armed with $4.3 billion in debt and equity funding, is looking to bring aboard real estate agents in Phoenix, Arizona, to support its “Home Reserve” iBuying platform, according to Inman, which spotted a jobs posting Friday morning.

A spokesperson for Opendoor told HousingWire that the company is looking to staff its Home Reserve platform with independent contract agents, not salaried agents. The firm is testing two different models with agents in Phoenix, the spokesperson said.

Home Reserve, launched in May, enables Opendoor to list sellers’ homes while purchasing and reserving their next home with all-cash offers. Under such a model, traditional agents hired by Opendoor will be listing and selling the home.

Opendoor’s agent play comes as iBuyers integrate elements of traditional brokerages, and traditional brokerages begin to incorporate components of iBuying, all in the quest to have a hand in every stage of the real estate transaction.

In its pitch to Phoenix-area agents on the job listing, Opendoor touts a steady feed of deals to help them bank commissions.

“Hanging your license with Opendoor Brokerage as an independent contractor means you are eligible for a consistent, steady stream of highly motivated seller & buyer clients,” the job post reads. “You will be able to service more buyers and sellers every year by being able to offer products no other brokerage can.”

While Opendoor is hiring a yet-to-be-determined number of 1099 agents, it already has an in-house staff to sell scores of homes across the U.S. In 2018, the firm acquired Los Angeles-based discount brokerage Open Listings for an undisclosed sum.

In June, Opendoor competitor Offerpad announced that it would allow users to list their homes with Offerpad’s own agents, in addition to using concierge services.

Meanwhile, Zillow Group quietly became a corporate broker in New York and Arizona. However, Zillow says it doesn’t plan to fashion itself into an iBuying platform with a brokerage arm. In August 2018, the company said it was not looking to cut brokers out of the transaction and would not be using its license to operate as a “traditional brokerage.”

Correction: An earlier version of this story said Open Listings was Dallas-based; it was based out of Los Angeles.



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Fed purchases of agency MBS total $892 billion


Five months after restarting a bond-buying program last used in the financial crisis, the Federal Reserve has purchased about $892 billion of agency mortgage-backed securities, according to a Fed blog post on Thursday.

The asset-buying has helped to drive mortgage financing costs to the lowest level ever recorded, with the average U.S. 30-year fixed rate hitting new lows eight times so far in 2020, according to weekly data from Freddie Mac. When there is competition for mortgage bonds, investors have to take smaller yields, which translates into lower interest rates for consumers.

Mortgage rates dropped to an all-time low of 2.88% in the first week of August, according to Freddie Mac. The rate has inched up since then, reaching 2.99% this week as investors worried about a protracted recession following a worsening of the COVID-19 pandemic.

In mid-March, when the Fed began buying bonds, the 30-year fixed rate as measured by Freddie Mac was 3.65%.

The Fed bought about twice as many Treasuries as MBS, according to the blog post’s tally. Cumulative purchases of Treasuries between March 13 and July 31, the same period used for the MBS total, amounted to $1.77 trillion. Treasury yields are used as benchmarks for MBS investors, so those purchases would have put downward pressure on home-loan rates, as well.

In March, the markets for Treasuries and agency MBS became “severely impaired” as investors reacted to the onset of the pandemic in the U.S., Lorie Logan, a Federal Reserve Bank of New York vice president, said in a July speech cited in Thursday’s blog post. If the Fed hadn’t responded “quickly and decisively” the credit markets would have seized up, she said.

“Given the importance of these markets, continued dysfunction would have led to an even deeper and broader seizing up of credit markets and ultimately worsened the financial hardships that many Americans have been experiencing as a result of the pandemic,” Logan said.

At the Fed’s June meeting of the rate-setting Federal Open Market Committee, policymakers committed to continuing the purchases at a level of about $80 billion per month in Treasuries and about $40 billion per month, net of reinvestments, in MBS.

“Although market functioning has improved markedly since the period of extreme stress in mid-March, uncertainty about the course of the pandemic makes it prudent to protect against further shocks,” Logan said. “Purchases over coming months will help mitigate risks of renewed stress and sustain continued smooth market functioning.”



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Fannie, Freddie fee hike may become an election issue


Fannie Mae and Freddie Mac, the two largest mortgage financiers in the world, on Wednesday night announced they would impose a 0.5% fee on every refinanced mortgage starting Sept. 1. Look for it to become an issue in the campaign.

The new fee “exposes President Trump to charges that he is trying to tax housing at the height of the economic crisis,” said Jaret Seiberg, managing director of Cowen Group, a Washington D.C. research firm. “That is a political liability for the president. We expect Democrats will exploit this.”

For borrowers refinancing their mortgages, the new fee probably will cost them about $1,400 per loan, according to the Mortgage Bankers Association. That’s money that could have gone toward bolstering the economy in the form of consumer spending, which accounts for about 70% of the nation’s GDP.

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