Mortgage – HousingWire |
- FHA delays mandatory use date for FHA Catalyst appraisal submission
- MSR market is partying like it’s 2006
- Black Knight posts strong Q4 but says organic growth will slow
- How to vet private money lenders for real estate investing
- Refi applications fall to 53% of mix amid rate spike
| FHA delays mandatory use date for FHA Catalyst appraisal submission Posted: 16 Feb 2022 11:13 AM PST The Federal Housing Administration announced this week that lenders have an additional year before they must submit appraisals through the FHA Catalyst: EAD Module. Per a mortgagee letter published on Tuesday, the deadline to onboard for lenders has been moved to March 14, 2023. The previous deadline, announced in mid- 2021, was March 14, 2022. The administration pushed the timeline for an additional year because stakeholders “expressed concern with the existing timeline,” the ML said. It’s not clear what specific concerns stakeholders had with the timeline for using the new system. FHA did not respond to a request to comment. The letter noted that during this period mortgagees and technology service providers are encouraged to continue their integration with and usage of the module for all forward and HECM origination electronic appraisal deliveries. Once the deadline arrives, it will be mandatory for lenders to use FHA Catalyst for submitting appraisals, unless a previous appraisal version was submitted to the legacy EAD, the administration said. What role does appraisal tech have in creating customers for life? In this day and age where borrowers put speed and efficiency over anything, a slow appraisal process could reflect negatively on the lender and cause strain with the borrower. This article explores how appraisal tech can streamline the appraisal process and ensure repeat customers. Presented by: ReggoraThe roll-out of FHA Catalyst—which has been touted as a success during Trump's administration—hit a snag last year. According to a report published by the Department of Housing and Urban Development's inspector general last year, momentum around the project stalled in the first part of 2021. The reason for the stall stemmed from staff vacancies and employee turnover, which were exacerbated during the presidential transition, the report said, so the initiative hit a standstill. "We found a lack of staffing capacity, implementation of effective coordination and communication practices, and effective oversight of management controls over acquisition processing," the report read. HUD also delayed a migration planned for December 2021 — to move its single-family default monitoring to FHA Catalyst — until March 1, 2022, when mortgagees must submit all default data to the FHA Catalyst system. In February, Lopa Kolluri, principal deputy assistant secretary at the FHA, acknowledged the delays, but said that the administration is back on track with their modernization initiative. "I feel really good about where we are with FHA Catalyst," she told HousingWire. The IG report said that as of August 2021, HUD had resumed FHA Catalyst development work at limited capacity and as of October 2021, HUD estimated that it would complete FHA Catalyst development in March 2025. The post FHA delays mandatory use date for FHA Catalyst appraisal submission appeared first on HousingWire. |
| MSR market is partying like it’s 2006 Posted: 16 Feb 2022 09:56 AM PST  The mortgage servicing rights market took off like a rocket in January and it has continued to accelerate into the stratosphere in February, according to industry experts who follow the MSR market closely. About $180 billion in residential bulk MSR assets were brought to market just in the month of January, "and February will be another huge month as well," according to Michael Carnes, managing director of the MSR valuation group for New York-based Mortgage Industry Advisory Corporation (MIAC). "This is nearly three times the monthly average witnessed in 2021," he added. Carnes said MIAC has at least six MSR offerings currently now in motion for February valued north of $10 billion, adding "that's just what we have actively in the pipeline now." "We closed a $10 billion deal not long ago," he said. "Next, we might be working on $30 billion or $40 billion [in MSR deals]. You just never know. I think it's going to stay this way for a while." Carnes added that he is seeing many players active in the MSR market right now, including private-equity funds and real estate investment trusts (REITs). "There’s a lot of new money now, which is a good thing, because with the volume we're seeing, you want to know the demand will be able to keep up with the supply," he said. "And, so far, it is." In addition, Carnes said there are plenty of lenders now sitting on "substantial amounts of [MSR] cushion" that they can't effectively tap unless they sell the assets. "So that’s going to continue to drive the activity as declines in origination volume and declines in margins in general cause [lenders] to want to sell some of their MSRs just to meet earnings targets," Carnes said. Bill Shirreffs, head of MSR services and sales operations at San Diego-based Mortgage Capital Trading, agrees with Carnes' bullish assessment of the MSR market. He said the outlook for MSR assets "remains very strong, driving [price] multiples to very attractive levels for prospective sellers." "As a result of a combination of declining origination volume and margin pressure, we anticipate that many MSR asset holders will take advantage of these favorable conditions in the near term," he added. "Overall, the bulk MSR market should be incredibly robust throughout 2022." Denver-based Incenter Mortgage Advisors' managing director, Tom Piercy, said he expects the exuberance in the market to continue, too, so long as interest rates are rising and the Federal Reserve remains committed to a hawkish position on rates in the year ahead as part of an effort to calm spiking inflation. Incenter completed a dozen bulk MSR sales transactions in January involving MSRs for agency-backed loan pools that together had a total unpaid principal balance of $113.2 billion, which is close to what Incenter historically has sold in an entire year. Piercy said Incenter earlier in February put out to bid an $11.5 billion Fannie Mae/Freddie Mac bulk servicing offering that is expected to close this week. In addition, Piercy confirms that Incenter has another $13 billion MSR offering in the pipeline that is expected to be released as soon as this week. "February appears to be another strong month," Piercy said. "In addition to the aforementioned $24.5 billion [in MSR offerings], we are going to release another $13 billion [MSR offering] next week and another $40 billion in multiple deals before month end." As far as the MSR cushion Carnes described, rankings provided by New York-based mortgage-data analytics firm Recursion shows the leading agency MSR servicers as of year-end 2021 were San Francisco-based Wells Fargo; Detroit-based Rocket Mortgage (formerly Quicken Loans); Westlake Village, California-based Pennymac; New York-based J.P. Morgan Chase; and Mount Laurel New Jersey-based Freedom Mortgage. Wells Fargo's agency MSR portfolio — including Fannie Mae, Freddie Mac and Ginnie Mae loan servicing — stood at $641.9 billion, or 8.2% of all agency loans serviced, as of December 6 of last year, according to the most recent data available from Recursion. Carnes of MIAC points out, however, that although banks are opportunistic about selling MSRs, he also said the assets are valuable for them to hold because they offer cross-selling opportunities that aren't available to non-depository institutions. "There’s a lot of reasons for selling MSRs, including tax advantages," Carnes explained. "But owning MSRs in areas where they [banks] have branches effectively gives them access to thousands of potential customers that they can offer credit cards, savings accounts, checking accounts and whatever other offerings the bank might have." Trailing Wells Fargo in MSR market share as of year-end 2021 was Rocket Mortgage, with a $481.4 billion agency MSR portfolio and a 6.2% market share. Next in line was Pennymac, at $479.3 and 6.2%; J.P. Morgan Chase, $387.5 billion and 5%; and Freedom Mortgage, $365.4 billion and 4.7%. Overall, as of December 6, 2021, Recursion's data show banks controlled 33.2% of the agency MSR market while nonbanks controlled 66.8%, based on the $7.8 trillion in unpaid principal balance of agency loans being serviced by lenders. Among the MSR leaders, only Wells Fargo recorded a decrease in its MSR portfolio size year over year — a $128.8 billion decline from year-end 2020, when its MSR portfolio stood at $770.7 billion. Freedom Mortgage recorded the biggest jump in its MSR portfolio over the same period, with a $108.3 billion increase, up from $257.1 billion as of year-end 2020. MSR portfolios are affected by loan prepayments, MSR sales and purchases, and MSRs tied to new agency loan issuance. In the case of Wells Fargo, for example, agency loan issuance with retained servicing declined from $165.6 billion in 2020 to $138.4 billion in 2021 through November 6. The bank also has been a net seller of MSRS in recent years, posting MSR net sales totaling nearly $2 billion combined for 2020 and 2021 — and $20.9 billion for 2019. Wells Fargo also recorded the largest volume of prepayments among the top MSR lenders — $294.3 billion in 2020, and $208.8 billion last year through November 6, according to Recursion. By contrast, Freedom Mortgage was the largest net purchaser of agency MSRs in 2021 through December 6, at $147.8 billion, up from $60.9 billion for the year-earlier period. In terms of net MSR sales, Quicken Loans led the pack last year, at nearly $112 billion year to date through December 6, 2021. Quicken also posted the largest agency loan issuance mark in 2021 through November 6, at $316.5 billion, up from nearly $294 billion in 2020. "Political tension, the Russia and Ukraine conflict, inflation, I can go on and on," Carnes said when asked to address potential headwinds facing the MSR market. "It makes it nearly impossible to precisely predict where rates will end in 2022." Carnes added that some may argue the sudden surge in MSR values and sales is "too much, too fast." Regardless, he said that hasn't stopped buyers from paying "five times and greater multiples for certain agency offerings." "Rising rates, significantly lower [mortgage] prepays and ample demand have driven MSR values to the highest levels since before the financial crisis [of 2007/2008]," Carnes said. The post MSR market is partying like it’s 2006 appeared first on HousingWire. |
| Black Knight posts strong Q4 but says organic growth will slow Posted: 16 Feb 2022 07:31 AM PST Florida-based mortgage tech and analytics behemoth Black Knight reported on Tuesday that despite strong sales in the fourth quarter, net earnings in 2021 were down from the prior year and organic growth should slow in 2022. According to the company’s latest earnings report, net earnings in 2021 reached $207.9 million, down from $264.1 million in 2020. That’s down 21%, which executives largely attributed to bookkeeping associated with the 2020 investment of Dun & Bradstreet Holdings. Black Knight said that in 2020 it recorded a $62.1 million non-cash gain because of DNB’s public offering and private placement. Business was good for the mortgage analytics and data company in the fourth quarter, largely on the strength of sales of Empower and MSP, Black Knight’s originations and servicing platforms. Profits in Q4 totaled $60.7 million, up 29% from the same period in 2020. Revenue reached $386.2 million from October to December, an increase of 13% compared to the same quarter of 2020. The company’s margin went from 12.3% to 14.5% in the same period. In total, Black Knight’s revenues in 2021 came in at $1.48 billion, an increase of 19% compared to the previous year. Software solutions represented 84.7% of the revenues last year, with an operating margin of 46.6%, compared to 46.5% in the previous year. The remaining revenue came from data and analytics, a segment with an operating margin of 28.7% in 2021, compared to 25% in 2020. Anthony Jabbour, Black Knight’s chairman and CEO, said in a statement that the company enters 2022 “with significant momentum following a record sales year in 2021 and with laser focus to continue our strong execution of our strategic initiatives.” Staying nimble in a fast-paced market with the right mortgage technology In the rapid-fire, volatile mortgage marketplace, lenders need technologies to help them remain nimble and successfully navigate constant change. Advanced product, pricing and eligibility technology creates efficiencies and helps lenders compete in a fast-paced market. Presented by: Black KnightBlack Knight’s full-year 2022 outlook forecasts revenues between $1.59 billion and $1.61 billion and adjusted Ebitda between $786 million and $803 million. Organic revenue growth reached 10% in 2021 for Black Knight, but expectations for 2022 are muted. Less mortgage origination volume will chill demand for data and analytics products in 2022. Kirk Larsen, the company CFO, said organic growth will likely fall between 7% and 8%. The 2022 forecast also considers the purchase of the outstanding interests of Optimal Blue from co-investors Cannae Holdings and investment entities affiliated with Thomas H. Lee Partners for $1.156 billion. As a result of the transaction, Optimal Blue will become a wholly-owned subsidiary of Black Knight. The transaction combines 36,376,360 shares of DNB at $722.5 million and $433.5 million in cash, funded by a revolving credit facility. Following the deal, Black Knight owns approximately 18.5 million shares of DBN with a fair value of $352.8 million. J.P. Morgan Securities LLC was the financial advisor, and Weil, Gotshal & Manges LLP was the legal advisor for the transaction. Black Knight announced in July 2020 it would buy 60% of Optimal Blue, a company founded in 2002 with an online marketplace that aims to connect originators, investors, and providers in the mortgage industry. When the deal was announced, Optimal Blue had nearly $2 trillion of transactions processed across its platform each year, facilitating several secondary market interactions such as pricing, locking, hedging, and trading mortgage loans. “The integration has gone very well, and there continue to be opportunities to go even further,” Jabbour said. He added that there are great cross-sell opportunities as Black Knight and Optimal Blue move forward as one company. In the fourth quarter earnings report, Black Knight also announced executive management transition: Jabbour will assume the role of executive chairman of the board; Joe Nackashi, the current president, will be the CEO; Larsen, the chief financial officer, will take the role of president. The post Black Knight posts strong Q4 but says organic growth will slow appeared first on HousingWire. |
| How to vet private money lenders for real estate investing Posted: 16 Feb 2022 06:58 AM PST In today’s competitive real estate market, an increasing number of real estate investors are turning to private money lenders to help them close deals faster, enhance property valuations, and increase their returns. The problem with private money lenders is that good ones are hard to come by. Let’s look at what private money lenders do and how they operate, as well as the potential benefits of using private or hard money loans and how to locate and select a reputable private money lender. How to vet a private money lenderAnyone with a little extra cash can become a private lender, but that doesn’t mean that every private lender is a good fit for a real estate transaction. The following are some helpful suggestions for vetting a private money lender:
How to Locate a Reputable Private Money LenderIn comparison to larger banks or even a local credit union, private lending is more reliant on relationships. The better a private lender’s chances of acquiring money for future projects are once they know they’ll be reimbursed on time and can trust a borrower. Because private lenders rely on word-of-mouth rather than advertising to the broader public, they can be more difficult to locate, but they are well worth the time and effort. 1. Gain a basic understanding of how private loans function.The first step is to consider a private money loan from a lender’s perspective. Unlike a major bank that the Federal Reserve backs, a private money lender is risking his or her own money. A private money lender will want to know the following things, in addition, to understanding the asset and how a private loan will be utilized to boost value:
2. Establish a private money lending network for real estate.Real estate is a people-oriented industry, and practically everyone in it knows that. A private money lender who is excellent at his work can typically be found by asking fellow investors and others in a real estate investor’s network, such as:
Private money lenders can be located inside and outside the real estate business. "Even though a lender lacks real estate experience, if a potential deal is appealing, he or she may be prepared to supply financing," says Joshua Blackburn, CEO, Evolving Home. "Working with a private lender outside of the firm, on the other hand, may necessitate an investor spending more time discussing the deal’s characteristics to the private lender," he adds. 3. Put together a deal pitch book.Like any other lender, a private money lender does not want to have to follow down a borrower for a missed payment, foreclose on a loan and reclaim the property, or get a smaller return than projected. A pitch book, also known as a deal book, is a presentation prepared by an investor for a private money lender that describes the deal, how it works, and how both the investor and the lender would profit. The following is information to offer to a private money lender:
4. Make a list of potential lenders.Developing a relationship with a potential private money lender is a two-way street. A private money lender likes to be impressed by a borrower, as an investor wants to feel at ease with a client. The slow and easy approach usually works well when meeting with a private lender. By talking to a lender through each step of the proposed agreement, including anticipated expenses, dates, and how predicted profits will be distributed, an investor can improve his or her chances of securing a private loan. The more at ease a private money lender is with the borrower and proposed project, the more possible an investor is to receive funding from a private lender. Grant McDonald is vice president-corporate development at 14th Street Capital. 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 How to vet private money lenders for real estate investing appeared first on HousingWire. |
| Refi applications fall to 53% of mix amid rate spike Posted: 16 Feb 2022 04:00 AM PST Mortgage applications decreased 5.4% for the week ending Feb. 11, reflecting what the mortgage market looks like when rates eclipse 4% for the first time since 2019. The Mortgage Bankers Association‘s seasonally adjusted refi index fell 8.9% from the previous week, bringing its share of total applications to the lowest level in 19 months. Meanwhile, the purchase index dropped a mere 1.2%. Compared to the same week one year ago, mortgage apps overall dropped 39.8%, with a sharp decline in refi (-54.1%) compared to purchase (-6.8%). The survey, conducted weekly since 1990, covers over 75% of all U.S. retail residential mortgage applications. According to Joel Kan, MBA's associate vice president of economic and industry forecasting, an unrelenting inflationary pressure increased market expectations of more aggressive policy moves by the Federal Reserve. It moved Treasury yields and, consequently, mortgage rates higher. The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 4.05% from 3.83% the week prior, above the 4% mark for the first time since 2019. For jumbo mortgage loans (greater than $647,200), rates climbed to 3.81% from 3.62% the week prior. The keys to lending in a post-refi boom world As record refinance volumes disappear, lenders need to get intimately familiar with their database of customers. Being a resource for all real estate financing needs for your customers will become more important in the next few years than ever before. Presented by: CIVIC Financial“Consistent with this period of higher mortgage rates, refinance applications fell 9% last week and stood at around half of last year's pace. The refinance share of applications was also at its lowest level since July 2019,” Kan said. The survey showed that the refi share of mortgage activity decreased to 52.8% of total applications last week, from 56.2% the previous week. The VA apps fell to 9.3% from 10% in the same period. The FHA share of total applications increased to 8.3% from 8% the prior week. Meanwhile, the adjustable-rate mortgage share of activity increased from 4.5% to 5% and the USDA held steady at 0.4%. Regarding purchases applications, the modest decline over the week was mainly due to the fall in government purchase applications. "Prospective buyers still face elevated sales prices in addition to higher mortgage rates. The heavier mix of conventional applications again contributed to another record average loan size at $453,000." Economists had predicted rates would rise in 2022 as the overall economy stabilized, reducing mortgage applications. For the coming weeks, Kan told HousingWire that If conditions stay in the current state, we'll certainly see higher rates. However, rates could quickly head in the other direction, "if something abroad rocks the boat," such as an armed conflict with Russia and Ukraine, an emergent Covid variant, or a sudden change in certain commodity prices. The post Refi applications fall to 53% of mix amid rate spike appeared first on HousingWire. |
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