Mortgage – HousingWire

HousingWire Magazine: October/November 2021
VA extends deadline for loan deferment
Regulation, forbearance leaves mortgage servicers in a bind
Mortgage rates finally eclipse the 3% mark

HousingWire Magazine: October/November 2021

Posted: 30 Sep 2021 09:01 PM PDT

2021 has been a year of transition. We've been transitioning to a new White House administration, transitioning away from a refinance market and cautiously transitioning back to meeting in person. And now, the year is almost over, with only one more magazine issue left until we cross over into 2022. But before we head into the new year, this issue will focus on what today's housing leaders and regulators are zeroed in on and the current state of housing.

Addressing one of the biggest questions around where housing stands, the first feature in this issue looks at Sandra Thompson, the Federal Housing Finance Agency acting director, and her plans for Fannie Mae and Freddie Mac. Mark Calabria, who led the FHFA before Thompson, was pushing for GSE reform up until he was replaced. You can go to page 36 to learn how priorities have shifted since Calabria left the position.

This month's issue also features our distinguished list of Vanguard winners. HousingWire has long been dedicated to "moving markets forward," and this list of 50 winners encompasses what that looks like in action. These are the executives who have become leaders in their respective fields within housing and mortgage finance. And most notably, they're the people laying the foundation for the future of our industry. Starting on page 42, you can read through their incredible accomplishments.

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The post HousingWire Magazine: October/November 2021 appeared first on HousingWire.

VA extends deadline for loan deferment

Posted: 30 Sep 2021 12:58 PM PDT

The Department of Veterans Affairs announced this week that it is extending the timeframe for borrowers to request loan deferment.

According to the VA's circular, servicers may continue offering loan deferment until July 1, 2023, pushing the deadline for almost two additional years. The original expiration of this option was supposed to occur on Oct. 1, 2021.

Under this option, the servicer defers repayment of the arrearages (principal, interest, taxes, and insurance) to the loan maturity date or until the borrower refinances the loan, transfers the property, or pays off the loan, the VA said.

The circular noted that if the borrower opts for loan deferral, no added costs, fees, or interest will be tagged onto the borrower. Additionally, there will be no penalty for early payment of the deferred amount, the VA said.

In general, loan deferment is not an option offered by the VA as it goes against the department’s regulation 38 C.F.R. § 36.4310(a), which states that "the final installment on any loan shall not be in excess of two times the average of the preceding installments."

However, the department is waving this requirement due to the COVID-19 pandemic.

The VA stressed in their announcement that the temporary waiver applies "only in the case of a servicer that is assisting a borrower under VA's COVID-19 Home Retention Waterfall" and that the servicer must ensure that the deferment will not have a negative impact on the government's interests in the VA-guaranteed loan.

Moreover, the circular said that any deferment that fails to comply with servicing laws, such as the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), would negatively impact the government's interest and thus would not be covered by this temporary suspension.

Other repayment options in VA's "waterfall" for a borrower coming out of forbearance are a VA Disaster Extended Modification and a COVID-19 Veterans Assistance Partial Claim Payment program (COVID-VAPCP), both valid through 2022.

Earlier in the year, industry trade groups urged the department to establish a partial claim program, similar to what the FHA has.

In turn, the VA implemented COVID-VAPCP, a temporary program where the VA purchases a borrowers COVID-19 indebtedness if a borrower agrees to repay the amount upon established loan terms.

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Regulation, forbearance leaves mortgage servicers in a bind

Posted: 30 Sep 2021 11:12 AM PDT

The COVID-19 pandemic has caused historic, unprecedented challenges for mortgage servicers. Forbearance deadlines get pushed back seemingly in perpetuity, and an unproven, inconsistent technology infrastructure has the potential to result in a series of foreclosure and loss mitigation crises.

This was one contention made during a panel featuring leaders in the mortgage servicing profession held at HW Annual in Frisco, Texas this week.

"We are talking about a large number of forbearance exits, between 15,000-to-20,000 a day," said Karthik Kumar, global head of mortgage practice at TCS. "CFPB has given clear guidance saying [servicers must be] proactive, and if you feel unprepared, it's unacceptable. The onus gets back to the servicer."

While the pandemic has created a uniquely difficult series of circumstances for servicers to face, the true difficulty of the current moment stems more from the pandemic's extremely broad area of effect, as opposed to the specific kinds of problems that are often created by other disasters on smaller scales. This is according to Michael Keaton, chief servicing officer of Shellpoint Mortgage Servicing.

"No matter where you are on the spectrum, whether you’re a mortgage servicer, you provide services or activities to a mortgage servicer, we’ve experienced COVID before in a lot of small ways," Keaton said. "Every time there is a FEMA-type event, in some ways, that’s kind of a miniature version of what we’re doing today. The difference is now that instead of it being a hurricane that hit the Texas coast or California wildfires, it's a pandemic that affects all 50 states simultaneously."

Servicing professionals are largely up to meeting the challenge, so long as they have the proper support from their institutions as well as from regulators, Keaton said.

Additionally, the importance of preparing for many simultaneous forbearance exits will be key for mortgage servicers in the near future. That means strengthening the technological infrastructure and training employees, said Uday Devalla, chief technology officer of Sagent.

Still, there are risks all over, according to Courtney Thompson, founder of Consigliera.

"Every time these forbearances naturally ended, because one of these extensions that we’ve been waiting for didn’t occur, in the newspaper, [certain servicers] would say ’70 trillion COVID consumers are out of forbearance, clearly the market is fine!’ And that’s not actually the case," Thompson explained. "So, despite the fact that I think that we can say that we’re not headed into a nationwide financial crisis, I do think that we are headed into a loss mitigation crisis [and] into a foreclosure crisis."

Forbearance was far from an ideal solution in answering the needs of certain consumers in the wake of the pandemic, Thompson says. With a pronounced volume of consumers who are delinquent and without a more viable solution, many have had to try to change their situations in other ways up to and including wholesale career changes which, in turn, changes their financial situations compared with the beginning of the pandemic.

"Enough has changed there that it’ll be really, really interesting to see what the delinquency event is here, and how the industry moves not just through this initial loss mitigation wave," Thompson said. "But [also], what really happens in January and in February when foreclosure is allowed by the CFPB again, and how servicers address that."

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Mortgage rates finally eclipse the 3% mark

Posted: 30 Sep 2021 07:21 AM PDT

The average 30-year-fixed mortgage rate rose 13 basis points to 3.01% for the week ending Sept. 30, according to Freddie Mac’s latest PMMS survey. Mortgage rates had been roughly flat for seven weeks, and this is the first time it rose above 3% since June.

Sam Khater, Freddie Mac's chief economist, said in a statement that rates rose across all loan types, in conjunction with the 10-year U.S. Treasury yield, which also reached its highest point since June.

"Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages which compound other labor and materials shortages," Khater said.

According to Khater, mortgage rates are expected to continue to rise modestly which will likely
have an impact on home prices, causing them to moderate slightly after increasing over the last year.

The previous week, rates increased slightly to 2.88% from 2.86%, essentially the second consecutive month of consistent mortgage rates.

Lenders – Now is the time to prioritize lead generation

HousingWire Editor-in-Chief Sarah Wheeler and Deluxe Senior Business Development Executive Mark McGuinn discuss the challenges lenders are facing to optimize lead generation, even as mortgage rates continue to drop.

Presented by: Deluxe

A year ago at this time, the 30-year fixed-rate mortgage averaged 2.88%. The 15-year fixed-rate mortgage averaged 2.28%, up from last week when it averaged 2.15%.

Mortgage rates have remained low in large part because of the Federal Reserve’s consistent monthly purchases of $120 billion in U.S. Treasury bonds and mortgage-backed securities. Last week, the central bank signaled it would reduce the program when substantial progress is made in the labor market.

On Thursday, the Mortgage Bankers Association (MBA) showed that the central bank’s announcement quickly led to a rise in mortgage rates, impacting the behavior of buyers seeking their dream home or looking to reduce their monthly payments through mortgage refinancing.

According to the MBA, the mortgage loan application volume declined by 1.1% for the seven days ending Sept. 24. Joel Kan, associate vice president of economic and industry forecasting at MBA, said that Treasury yields increased due to optimism about the strengthening economy. In response, “mortgage rates rose across all loan types, with the benchmark 30-year fixed rate reaching its highest level since early July 2021,” he said.

Kan noted that the appreciation of home prices, which have steadily been going up for over a year now, had also depressed mortgage applications though the purchase market is still strong overall.

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Loans And Mortgage

Thursday, September 30, 2021