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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Average U.S. 30-year mortgage rate rises from all-time low


Average mortgage rates for a 30-year fixed mortgage increased slightly to 2.87% this week, the second-lowest on record, rising one basis point from last week’s all-time low of 2.86%, while the less-popular 15-year rate fell to a new low of 2.35%, Freddie Mac said on Thursday.

The 30-year rate has broken records nine times since March because of a Federal Reserve bond-buying program that has poured about $1 trillion into the mortgage markets. The central bank resurrected a program it first used during the financial crisis a dozen years ago to create competition for bonds and cause the yields that influence mortgage rates to shrink.

The Fed issued a statement on Wednesday after the end of a two-day meeting that said it would likely keep its benchmark overnight lending rate near zero through 2023, and would continue purchasing mortgage-backed securities “at least at its current pace” for as long as necessary.

Mortgage lending volume this year is likely to break records as homeowners refinance and new buyers scramble to take advantage of some of the cheapest financing costs history, Fannie Mae said in a forecast on Tuesday.

Originations this year are expected to reach an all-time high of $3.9 trillion, boosted by $2.4 trillion in refinancings, the highest level since 2003 and more than double the volume seen in 2019, the mortgage giant said.

“We continue to believe that a low-rate environment will support refinance demand over the forecast horizon,” Fannie Mae said in the forecast. “At the current interest rate of 2.86%, we estimate that nearly 69% of outstanding first-lien loan balances have at least a half-percentage point incentive to refinance.”

The annual average U.S. rate for a 30-year fixed mortgage will be 3.1% in 2020 and 2.7% in 2021, the forecast said, matching Fannie Mae’s prior monthly projection. Both would be the lowest annual averages on record.



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SitusAMC acquires ComplianceEase in latest mortgage tech M&A deal


Real estate services and technology firm SitusAMC just acquired the parent company of compliance technology provider ComplianceEase, the latest in a series of mergers and acquisitions that are shaking up the mortgage tech space in the last year.

ComplianceEase will operate as a wholly owned subsidiary of SitusAMC with no planned changes to existing staff or operations, SitusAMC said in a news release on Tuesday.

John Vong, a founder of ComplianceEase, will stay on as chairman, and CEO Michael Jackson will also remain.

ComplianceEase, founded in 2001, is the mortgage industry’s largest provider of compliance software for mortgage originators, secondary market players and regulators. The firm says it has processed audits for over 90 million loans in the last two decades. Its product suite includes mortgage compliance systems, auditing technology, and a portal to verify state and federal licenses and registrations.

“This acquisition is an important step in our goal of bringing greater automation and transparency to the residential market,” said SitusAMC CEO Michael Franco in a statement. “The combination of the ComplianceEase product set and our existing technologies enhances our position as a leading technology provider for the mortgage industry. Clients that fully participate in our ecosystem of solutions will ultimately be able to reduce secondary market trading diligence from days to minutes.”

Terms of the deal were not disclosed.

SitusAMC has embarked on something of an acquisitions spree in the past year, picking up analytics company Baseline Analytics and fintech firm Alan King and Company.

With the acquisition of ComplianceEase, SitusAMC says it’s beefing up its resi tech products, which now includes systems of record on custodial and warehouse space (emBTRUST and ProMerit); product, pricing and eligibility for loan conduits (Rate Lock System); document classification and data extraction (Acuity); document management (DocAcuity); and loan accounting (sbo.net).

SitusAMC is competing in the same space as highly capitalized rivals Black Knight Financial Services, and Intercontinental Exchange. The latter just closed on an $11 billion deal to acquire Ellie Mae, a leading provider of cloud-based services for the mortgage finance industry.

New York-based Berkery Noyes served as exclusive financial advisor to ComplianceEase.



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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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Doug Duncan to deliver the economic forecast at HousingWire Annual


Economists are having a moment. Their ability to model likely future scenarios has always been important, but during a once-in-a-lifetime event like a global pandemic, they are invaluable. Understanding what businesses should expect next quarter, next year and in the next five years has never been more important — or more unclear.

That’s why we’ve invited Doug Duncan, senior vice president and chief economist at Fannie Mae, to give the economic forecast at our HousingWire Annual event on Oct. 8.

At Fannie Mae, Duncan is responsible for forecasts and analyses of the economy and the housing and mortgage markets. He also oversees strategic research regarding the potential impact of external factors on the housing industry — which this year include a global pandemic, nationwide stay-at-home orders, unlimited Fed bond-buying and the lowest interest rates on record. Duncan also leads the House Price Forecast Working Group reporting to the Finance Committee.

Under Duncan’s leadership, Fannie Mae’s Economic & Strategic Research Group (ESR) won the NABE Outlook Award, presented annually for the most accurate GDP and Treasury note yield forecasts, in both 2015 and 2016 – the first recipient in the award’s history to capture the honor two years in a row. In addition, ESR was awarded by Pulsenomics for best home price forecast.

Named one of Bloomberg/BusinessWeek’s 50 Most Powerful People in Real Estate, Duncan is Fannie Mae’s source for information and analyses on demographics and the external business and economic environment; the implications of changes in economic activity on the company’s strategy and execution; and for forecasting overall housing, economic, and mortgage market activity.

Prior to joining Fannie Mae, Duncan was senior vice president and chief economist at the Mortgage Bankers Association. His experience also includes work on the Financial Institutions Project at the U.S. Department of Agriculture and service as a LEGIS Fellow and staff member with the Committee on Banking, Finance, and Urban Affairs for Congressman Bill McCollum in the U.S. House of Representatives.

Duncan will be joined by other housing luminaries at HousingWire Annual, including Ed DeMarco, president of the Housing Policy Council, Cindy Waldron, vice president of research and analytics at Freddie Mac, Laurie Goodman, vice president of the Urban Institute, Robert Dietz, chief economist at the National Association of Home Builders, and many more.

We’re focusing this virtual event on The Great Acceleration — the disruption speeding through the business landscape, upending traditional strategies and agendas for those in housing. We’ve got sessions on the future of regulation, business strategy during times of social upheaval, increasing homeownership in underserved communities, green housing, capital market appetite by channel and much more.

HW+ members can attend for free by registering here. Not an HW+ member yet? You can sign up for free attendance plus get the amazing premium content we publish digitally and in the print magazine. Regular registration can be accessed here.



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CoreLogic stockholders will decide board’s fate on Nov. 17


On Nov. 17, stockholders of CoreLogic will get to cast their vote on whether to replace the current board of directors with nominees proposed by Cannae Holdings and Senator Investment Group at a special meeting.

In a letter to stockholders, CoreLogic urged them not to sign a proxy card sent by Senator or Cannae and reminded them that only their last vote on the matter would count. Stockholders who had already signed a proxy card for Cannae or Senator can reverse that vote by sending in a new proxy card, the letter said.

The battle for CoreLogic started on June 26 when Cannae and Senator, who jointly own 15% of the company’s stock, submitted an offer to acquire the company for $65 a share, for a total of $7 billion. CoreLogic rejected the proposal on July 7, saying the bid undervalued the company and raised regulatory concerns, labeling it an “opportunistic proposal.”

In a series of defensive measures, CoreLogic raised its 2021 and 2022 financial guidance, while increasing share reauthorization to $1 billion. Adopting a “poison pill” strategy, Corelogic approved a shareholder-rights plan that prevents investors from acquiring 10% or more of the company’s common stock, or 20% in the case of certain passive investors.

On July 29, Cannae and Senator issued an open letter to fellow shareholders announcing that they had initiated a process to call a special meeting of shareholders to elect nine “independent and highly accomplished directors” to the CoreLogic board of directors. The companies said their goal was to replace the majority of the board with “nominees who will act in best interests of shareholders” who have no affiliation or association with Senator, Cannae, or any of their affiliates.

It’s unclear which way stockholders will vote. CoreLogic’s stock took off on the news of the takeover bid, jumping 25% to $66.33 on June 26, and was at $66.37 as of close of market on Friday, Sept. 4. 

The chairman of Cannae Holdings is Bill Foley, the chairman of Fidelity National Financial, which is also majority owner of ServiceLink. In addition, Foley is executive chairman of Black Knight Financial Services — a direct competitor of CoreLogic.

The vote on Nov. 17 concerns the removal of these board directors:

  • David Chatham, president and CEO of Chatham Holdings Corp.
  • Douglas Curling, principal and managing director of New Kent Capital
  • John Dorman, private investor, formerly CEO of Digital Insight
  • Paul Folino, chairman of the board, and former executive chairman at Emulex Corp.
  • Thomas O’Brien, former CEO and president at Insurance Auto Auctions
  • Pam Patenaude, former deputy secretary of HUD and co-founder of the J. Ronald Terwilliger Foundation for Housing America’s Families
  • Vikrant Raina, managing partner at BV Investment Partners
  • Michael Shepherd, chairman of Bank of the West
  • David Walker, former director of the program of the accountancy at the University of South Florida.

In their place, Cannae and Senator propose appointing:

  • W. Steve Albrecht, the Gunnel Endowed Professor in the Marriott School of Management at Brigham Young University and former chairman of Cypress Semiconductor
  • Martina Lewis Bradford, founder, president, and CEO of Palladian Hill Strategies, a government relations firm
  • Gail Landis, founding partner of Evercore Asset Management, where she served as managing principal from 2005 until 2011. She has been on the board of Morningstar since 2013
  • Wendy Lane, who has served as chairman and founder of Lane Holdings, an investment firm, since 1992
  • Ryan McKendrick, the former president and CEO of AMCOL International
  • Katherine “KT” Rabin, who served as CEO at Glass, Lewis & Co., a provider of global governance services, from 2007 to 2019
  • Sreekanth Ravi, co-founder and executive chairman of the board of RSquared, a cloud-based artificial intelligence (AI) platform in the workforce intelligence market
  • Lisa Wardell, chairman and CEO of Adtalem Global Education, a workforce solutions provider
  • Henry W. “Jay” Winship, president and founder of Pacific Point Capital, a real estate investment firm 
At this point CoreLogic plans to hold the special meeting in person, but said it has contingency plans in place for a virtual meeting if necessary.  



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Mortgage applications fall for the third week in a row


Mortgage applications fell 2% last week, according to a report from the Mortgage Bankers Association, marking the third week of declines.

The refinance index also fell 3% last week, however remained 40% higher than the same week one year ago. Despite 30-year fixed and 15-year fixed mortgage rates declining to near historical lows, both conventional and government refinancing activity fell last week, said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

“Mortgage rates have remained below 3.5% for five months now, and it’s possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates,” Kan said.

Purchase applications remained essentially unchanged, falling .2% from one week earlier on a seasonally adjusted basis, and 28% higher than the same week one year ago – the 15th straight week of year-over-year gains.

According to Kan, lenders are reporting that the strong demand for home buying is coming from delayed activity from the spring, as well as households seeking more space in less densely populated areas.

The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.6% of total applications.

Here is a more detailed breakdown of this week’s mortgage application data:

  • The FHA’s share of mortgage apps fell to 10.2% from 10.5%.
  • The VA share of applications fell to 11.4% from 11.8%.
  • The USDA share of total applications remained unchanged from 0.6% the week prior.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to 3.08% from 3.11%.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) remained unchanged from 3.41% the week prior.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.19% from 3.16%.
  • The average contract interest rate for 15-year fixed-rate mortgages fell to 2.67% from 2.7%.
  • The average contract interest rate for 5/1 ARMs fell to 3.08% from 3.14%.



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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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Q&A: 2020 HW Insider winner Dean Kirchen on the top servicing trends to watch


In honor of the 2020 HW Insiders list that was announced on Monday exclusively for HW+ members, HousingWire interviewed Dean Kirchen, senior vice president of WFG Default Services at WFG National Title Insurance Company, to get his insight on the servicing industry. 

In this Q&A, he shares his thoughts on the biggest trends in the servicing industry and one of the issues that he thinks people aren’t paying attention to that they need to be. 

For this week only, HW+ members get a sneak peak at the 2020 HW Insiders. The full profiles will be available Sept. 1, 2020.

HW: What trends in the servicing industry are you watching right now?

Dean Kirchen: We’re mostly focused on the various legislation that will impact the way servicers do business in states. That will have an effect on whether forbearance, foreclosure moratoriums and forbearance loan arrangements are made.

Dean Kirchen
SVP of WFG Default Services

You could see a whiplash effect where if there’s forbearance or moratoriums that last for a certain period of time, or an extended period of time, what is that anticipated volume going to be like, if at all, down the road? And, do servicers have the capacity to handle the types of requests that they will be faced with, whether it’s qualifying forbearance, qualifying modifications, refinancing, foreclosures, etc.? We’re really just trying to gauge servicer capacity for when forbearances and moratoriums are lifted to see how they handle that and then we would go from there. 

HW: What’s the best piece of advice that you’ve ever received?

Dean Kirchen: The piece of advice that I’ve received in the past that I always refer back to is the importance of work ethic, accuracy and consistency. This is what keeps us moving forward and building new relationships.

HW: What’s one key thing that you do in your life that you think has been a key to your success?

Dean Kirchen: For me, it’s a work ethic. I’ve been working ever since I was in high school, and I was lucky enough my father ran a car dealership, so I was always hanging around the car dealership. In that time, my father taught me a lot about the importance of work ethic, and being in the car business, those were long hours. After spending all those summers with my father, it was that work ethic that’s stuck with me through life. 

HW: How do you encourage innovative ideas?

Dean Kirchen: It’s important to ask questions, listen and then engage the right people within the organization to make decisions. It’s important to listen to what your clients are asking, how they’re asking it and then, engage with the frontline people within our organization on how they’re interacting. 

How would they have handled this situation better? What would set us apart from the status quo? We’re in the service business, and just like in anything else, people want to feel special, and they want to feel like they’re not part of the herd. 

HW: What’s something that people need to be paying attention to right now that they aren’t?

Dean Kirchen: It would be delinquency rates. What’s scary to me is that with the forbearance programs and moratoriums that are going on, are people being mindful that these payments will be due in the future? And, how are they providing for a future stream of payments that could be due, in regards to their mortgage payment, that could be in excess of what they currently pay?

Hopefully people are being mindful of these obligations that are being postponed because not all lenders will be putting those on the back end of the loan. They could be due within certain periods of time depending on who the investor is.

A lot of borrowers are making payments even though they are in forbearance agreements, but then you have another group of individuals who are not making payments under the forbearance agreement. How are they accounting for these future payment streams that could be due that could be in addition to their normal monthly payment?



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Is the FHFA about to delay the refi fee?


According to reporting by the Wall Street Journal on Saturday, the Federal Housing Finance Agency has been communicating with mortgage industry groups about delaying the implementation of a fee which would add a 0.5% surcharge to refinance mortgages sold to Fannie Mae and Freddie Mac starting Sept. 1.

According to the article, the FHFA is considering a delay to the adverse market fee implementation date, but is not planning to rescind it. The FHFA has been widely criticized both for the reasoning given for the fee and the short three-week notice to lenders and homeowners already in the middle of a refinance process.

Dave Stevens, former president and CEO of the Mortgage Bankers Association and former commissioner of the Federal Housing Administration, told HousingWire on Saturday that, “If true, it seems clear that Director Calabria listened to industry concerns about the impact of this short time frame to implement. And while the logic of the fee remains in question, this is a good sign and hopefully will lead to a change in behavior going forward where impact assessment conversations can take place prior to major policy announcements.”

Following the FHFA’s announcement of the fee on Aug. 12, the mortgage industry organized a full-out campaign to get the FHFA and GSEs to reconsider the fee, with national and state lender associations mobilizing members to reach out to FHFA and congressional leaders.

On Aug. 20, the heads of Fannie and Freddie addressed industry concerns, but the response did nothing to quell opposition to the move and this week Capitol Hill joined the fray.

On Wednesday, a group of prominent senators including Sherrod Brown, (D-OH) and Elizabeth Warren (D-MA) sent a letter to FHFA Director Mark Calabria questioning the decision to add the fee on such short notice and asking for specific feedback on the FHFA’s reasoning behind the action.

The group of senators asked specifically for FHFA to describe the market conditions they are trying to address with this fee, and how “a direct charge to homeowners was determined to be the most appropriate way to address those conditions.”

The Senators also asked why the FHFA and GSEs “believe that individual homeowners are better suited to bear part of the cost of this economic downturn than the Enterprises.”

On Friday, 41 bipartisan members of Congress signed a letter to Calabria outlining their objections to the fee.

“In announcing this new ‘Adverse Market Refinance Fee,’ Fannie Mae and Freddie Mac (commonly referred to as government-sponsored enterprises, or the GSEs) cite market and economic uncertainty, along with higher risk and costs,” the letter states. However, when this policy was announced, no further explanation was provided to justify the additional cost to homeowners.

“On the contrary, homeowners saving hundreds of dollars per month on their mortgages are reducing their debt-to-income ratio, which reduces risk to investors. Furthermore, lenders report reverifying employment within 24 hours of closing, further reducing credit risk,” the letter continues.

“Fannie Mae, Freddie Mac, and Federal Housing Finance Agency (FHFA) have taken crucial steps throughout this pandemic to protect homeowners and our economy. That is why we were surprised by this announcement that will make refinancing a mortgage more difficult and more expensive for even the most creditworthy homeowners.

“The best thing we can do for the fiscal position of the United States is to allow the economy to recover as quickly and robustly as possible. To that end, we request that FHFA and the GSEs reconsider this fee as our country recovers from COVID-19.”

The White House weighed in shortly after the fee was announced, saying it had “serious concerns.”



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