Mortgage – HousingWire |
- Americans’ mortgage debt looks great again
- Opinion: Thin margins? Reevaluate your service providers
- Mortgage delinquency rate continues to shrink
- UWM posts $330M in profits in Q3 2021
| Americans’ mortgage debt looks great again Posted: 09 Nov 2021 02:38 PM PST  One of the most unloved American economic success stories has been how spectacular American households with mortgage debt look today. Let's take a look at the New York Federal Reserve’s Household Debt and Credit Report for the third quarter, released today. The most important factor is that debt structures are vanilla. Post-2010, lending standards in America became normal again, and while I still believe they're very liberal, they're sane. I can't emphasize enough how critical this aspect is to the American economy. People who make the most money, excluding the 1% and 0.01%, usually have the most consumer debt because they're homeowners. What happened post-2010 is that exotic loan debt structures that don't provide long-term fixed debt products left the system. This was very critical to not only the housing market but also the health of the U.S. economy. As you can see below, when you lend to the capacity to own the debt, you should never see a rise in foreclosures or bankruptcies unless a job loss recession happens on a massive scale. We can see a slow and steady positive downtrend in stressed financial data, unlike in the 2005-2008 period where people filed for bankruptcies and foreclosures without a job loss recession.  This content is exclusively for HW+ members.Start an HW+ Membership now for less than $1 a day.Your HW+ Membership includes: Already a member? log in The post Americans’ mortgage debt looks great again appeared first on HousingWire.  |
| Opinion: Thin margins? Reevaluate your service providers Posted: 09 Nov 2021 11:48 AM PST The first signs of a shifting market cycle are already here. Purchase volume has caught up with, and will likely soon eclipse, refinance volume. And the whispers of margin compression are again being heard across the mortgage industry. The refinance explosion of 2020 wasn't going to last forever. But it's been a while since mortgage lenders had to really focus on being competitive in a more challenging purchase market. Already, the traditional cost-cutting strategies of staff reduction or attrition and the introduction of additional tech and automation to the process are being implemented widely. Another way to maintain profit margins, even when volume and revenue tail off a bit, is by thoroughly revisiting the lender's traditional service providers. That network of back-office services, title and appraisal providers and others tasked with important (and often costly) elements of the lender's operation aren't always as easy to evaluate to ensure top-flight efficiency and productivity. But it can be done, and should, by lenders serious about finding every way to alleviate the pain of shrinking margins. Traditionally, many lenders consolidate their service network in times of market change or even decline. In those cases, usually the biggest providers with the widest geographical footprints and best throughput emerge as the "winners." But size and volume capabilities don't always guarantee maximum efficiency. The most adaptable mortgage lenders evaluate their provider network, asking core questions that aren't always defined by size. Is the provider able to handle large volumes, but are they also flexible and adaptable to changing conditions? Some of the largest providers show decreased efficiency during short-term market dips or hiccups, which can impact the lender in multiple ways. At the same time, is the service provider able to manage the volume currently being processed by multiple providers without losing the ability to offer more granular service in key local markets? Especially when it comes to purchase transactions, there are hundreds of local details, customs and requirements that can be lost by a "central office" provider model, and when it comes to purchase transactions, those missed details can impact the lender's fallout rate negatively. Another element of provider service to evaluate is versatility. If a service provider can manage amazing amounts of refinance volume, but can't also assist the lender with the same level of efficiency and effectiveness when it comes to purchase, the lender essentially has a different service provider on its hands. The costs and time associated with swapping out such vendors, especially when unanticipated, only add to a lender's expense. So as they're evaluating their service network, lenders should assign bonus points to providers who not only check the boxes for a specific kind of transaction, but who can manage purchase and home equity transactions just as effectively. Even providers who can assist with things like commercial or REO transactions or issues can be an asset to lenders with a wide product mixes. The next point of evaluation seems intuitive, but is often sacrificed when lenders consolidate their networks based upon bandwidth alone. How well does a service provider march to the lender's tune, rather than dictating elements of the workflow, as some of the largest providers can do? Does the providers technology align with the lender's process? Are communications between provider and lender easy and secure? Does the vendor maintain or even accelerate the process, or slow it down because of an incompatibility? Most importantly, how well does the service provider respond where glitches or errors take place? Even the very best third-party providers run into the occasional mistake or mix-up, but only the best providers own those issues and rectify them at even a systemic level if the need is there. A good service network also makes it as easy as possible for lenders to oversee and monitor them. This is true from a compliance as well as performance standpoint. All indications are that a more aggressive regulatory enforcement trend is swiftly approaching our industry. Now is not the time to have a service provider which handles large volumes of transactions, but has a reporting process that is anything but transparent. It's been said a thousand times before, but it's almost past time for lenders to revisit their third-party partners' compliance programs as well. The failure to do so could lead to an unanticipated cost of catastrophic proportions. Finally, while it may not need to be a requirement to be a part of a streamlined vendor network in competitive markets, it's certainly a major bonus when a service provider can provide additional value, such as services beyond their core services that lenders can lean on while cutting other costs. The title insurance industry, regulated at the state level, is a grand example. Mortgage lenders can expend incredible resources simply monitoring changes at the state, county and municipal level that could impact their TRID expenses and more. But a provider that is accurately and continuously monitoring and reporting on regulatory changes that can impact clients can be an extremely valuable resource itself. Not sure if a provider that otherwise meets the requirements can help with specialized monitoring, training or other non-core services? Just ask! Usually, the best service providers are more than willing to provide additional value when asked by their core clients, and often at their own expense. Re-evaluating the compatibility of a lender's service network is a bit like a homeowner faced with rising energy costs as winter sets in. The homeowner could completely replace the furnace with something newer and more efficient. She could also run it less often or at a lower temperature. Both could be effective. But a significant long-term savings could also be realized by evaluating the adequacy of the insulation in the attic and possibly adding more, at much less time and cost. To apply the analogy to our industry, mortgage lenders are likely sitting on unrealized and potentially extraordinary savings in the form of reevaluating and properly aligning their service network. While the merits can be debated, the fact is that ours is an industry based upon multiple participants managing multiple elements of the home-buying transaction. The word "silo" is thrown around quite a bit in that discussion. Much of the time, it's the mortgage lenders who carefully choose the participants they'll allow to manage their volume — with particular attention not just to throughput, but how well a potential provider aligns with those lenders — that find significant cost savings on the production side. Regina Braga is COO at Res/Title. This column does not necessarily reflect the opinion of HousingWire's editorial department and its owners. To contact the author of this story: To contact the editor responsible for this story: The post Opinion: Thin margins? Reevaluate your service providers appeared first on HousingWire.  |
| Mortgage delinquency rate continues to shrink Posted: 09 Nov 2021 09:07 AM PST Mortgage delinquency rates hit the lowest level since the beginning of the pandemic in August, according to the most recent CoreLogic Loan Performance Report. However, some borrowers are still facing severe financial challenges. In August, 4% of mortgages were delinquent by at least 30 days, including foreclosure, a drop from the 6.6% rate in August of 2020. The transition rate – mortgages transitioning from current to 30 days past due – dropped three basis points to 0.6% in the same period. Frank Martell, president and CEO of CoreLogic, said that fiscal and monetary stimulus are pushing home prices and equity to record levels, which “is driving down delinquencies and fueling a boom in cash-out refinancing transactions.” The report, published on Tuesday, accounts for only first liens against a property, and rates are measured only against homes with an outstanding mortgage. CoreLogic has approximately 75% coverage of U.S. foreclosure data. The most notable decline was in the serious mortgage delinquency rate (90 days or more past due, including loans in forbearance), which dipped 17 basis points year over year to 2.6% in August. Providing a Seamless Forbearance Exit for Homeowners While they explore every option available to help homeowners avoid preventable foreclosures, the need for efficient and effective ways to do that is imperative. This white paper provides insights on how servicers can help homeowners navigate forbearance. Presented by: XomeEarly-stage delinquencies (30 to 59 days past due) went from 1.5% to 1.1% between August 2020 and 2021. Meanwhile, adverse delinquencies (60 to 89 past due) decreased from 0.8% to 0.3% in the same period. According to Frank Nothaft, chief economist at CoreLogic, the overall delinquency rate decline masks the serious financial challenges that some borrowers have experienced. “In the months prior to the pandemic, only one-in-five delinquent loans had missed six or more payments. This August, one-in-two borrowers with missed payments were behind six-or-more monthly installments.” In a September op-ed for HousingWire, MBA chief economist Mike Fratantoni noted that FHA and VA delinquency rates have been falling rapidly. “Last year, the FHA delinquency rate reached an all-time high of 15.65%. The FHA delinquency rate in the second quarter of 2021 fell to 12.77%, almost 3 percentage points lower, but it remains more than 4 percentage points above the pre-pandemic level,” Fratantoni wrote. “Clearly, FHA borrowers were severely impacted by the onset of the pandemic and the resulting lockdowns, but the trend is improving.” According to CoreLogic’s report, in August, the labor market’s improvement was weaker than expected: there were 235,000 new jobs compared to the projected total of 720,000. Income growth and a continued buildup in home-equity wealth are crucial to financial recovery, the report added. The foreclosure inventory rate was 0.2% in August, compared to 0.3% one year before, a low record level since CoreLogic began recording data in 1999 due to a moratorium imposed during the pandemic. The post Mortgage delinquency rate continues to shrink appeared first on HousingWire.  |
| UWM posts $330M in profits in Q3 2021 Posted: 09 Nov 2021 06:02 AM PST  United Wholesale Mortgage (UWM), the nation’s largest wholesale lender, posted $329.9 million in profits during the third quarter, an uptick from the $138.7 million registered in the second quarter. According to the Pontiac, Michigan-based lender's earning report, loan origination volume reached $63 billion in the third quarter, up from $59.2 billion in the prior quarter and the $54.3 billion year over year. UWM said it originated $26.5 billion in purchase mortgages during the third quarter, far more than its rivals. "UWM broke company records yet again in Q3 for overall originations and purchase originations, demonstrating continued momentum for both UWM and the broker channel," Mat Ishbia, UWM's president and CEO, said in a statement. "I'm proud of our newest technology launches, BOLT, The Source, and UWM Appraisal Direct... Now more than ever, the broker channel is the fastest, easiest and cheapest way for a consumer to get a mortgage." During the company's earnings call, Ishbia said UWM's technology sets it apart from the competition and will allow it to win in a more purchase-heavy environment. This content is exclusively for HW+ members.Start an HW+ Membership now for less than $1 a day.Your HW+ Membership includes: Already a member? log in The post UWM posts $330M in profits in Q3 2021 appeared first on HousingWire.  |
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