FHFA Extends Mortgage Origination Flexibilities

The Federal Housing Finance Agency (FHFA) extended several loan origination flexibilities currently offered by Fannie Mae and Freddie Mac designed to help borrowers during the COVID-19 national emergency. Those flexibilities are extended until at least June 30 and include:

Alternative appraisals on purchase and rate term refinance loans;

Alternative methods for verifying employment before loan closing;

Flexibility for borrowers to provide documentation (rather than requiring an inspection) to allow renovation disbursements (draws); and

Expanding the use of power of attorney and remote online notarizations to assist with loan closings.​

“These loan origination flexibilities will continue to facilitate loan closings and go a long way to keeping the market functioning effectively during this national emergency,” said FHFA Director Mark Calabria.

“Today’s actions also keep homebuyers, sellers, and appraisers safe.”

The FHFA also reiterated recently that borrowers in forbearance with a Fannie Mae or Freddie Mac-backed mortgage are not required to repay the missed payments in one lump sum.

“During this national health emergency, no one should be worried about losing their home," said Director Mark Calabria.

“No lump sum is required at the end of a borrower's forbearance plan for Enterprise-backed mortgages. To help homeowners navigate the forbearance process, FHFA partnered with CFPB on the Borrower Protection Program to provide homeowners accurate information about forbearance and address concerns noted in some consumer complaints. While today's statement only covers Fannie Mae and Freddie Mac mortgages, I encourage all mortgage lenders to adopt a similar approach."

In response to the COVID-19 national emergency, the GSEs permitted borrowers with financial hardship due to the pandemic a forbearance option, which is a pause or reduction in their monthly mortgage. The missed payments will have to be paid back by the borrower. For those borrowers who opt for forbearance, their mortgage servicer will contact them about 30-days before the end of the forbearance plan to see if the temporary hardship has been resolved and discuss a variety of repayment options. If the hardship has not been resolved, the forbearance plan can be extended. If the hardship has been resolved, the servicer will work with the borrower to:

Set up a repayment plan;

Modify the loan so the borrower's payments are added to the end of the mortgage; or

Set up a modification that reduces the borrower's monthly mortgage payment.

Source: MReport 5/5/2020 Author: Seth Welborn

47% of U.S. Realtors expect COVID-19 to decrease business by at least half

In news that will do little to calm the nerves of America’s antsy mortgage professionals, data released by Point2 Homes last week finds sentiment among real estate agents around COVID-19’s impact on their businesses to be one of pessimism and concern.

The survey, which follows the far more optimistic polling of homebuyer sentiment Point2 Homes released on April 9, collected responses from 259 agents between April 7 and 14. There’s little potential for shock in some of the data, such as 77% of respondents noticing at least “quite a significant drop” in homebuyer interest. But the feelings realtors expressed around what business will look like once COVID-19 passes are somewhat out of step with what realtors told MPA.

When asked about their level of concern over the impact of the outbreak on their business, 88% of realtors said they are at least “somewhat worried”, but the majority of that cohort are either “very worried and concerned” (36%) or “extremely anxious” (29%). Only 3% of realtors said they are not concerned by COVID-19’s impact “at all”.

Eric Bramlett, broker at Bramlett Residential in Austin, Texas, says the brutality of the 2008 financial collapse prepared most agents for the worst COVID-19 will throw at them.

“The 2008 recession was very long and directly impacted the real estate market. This looks like it will be shorter and less impactful,” he says.

“It looks as though we'll see a 10-20% decline in sales volume in 2020, which is not ideal, but not catastrophic. Most of my peers feel the same way.”

Kerry Martenson of 4 Seasons Real Estate in Billings, Montana, agrees that a 20% reduction in business wouldn’t be out of line with what her business has been experiencing, but because her state allowed sales to continue so long as safe showing guidelines were followed, the local market has been humming along without too much difficulty.

“Our available home inventory has been very low, but I expect to see more listings come on the market as the state continues to open back up,” she says.

“For me personally, I am not overly concerned about how real estate in Billings will be affected. I expect to see home prices and home sales continue to increase.”

The responses were grim when agents were asked to estimate the extent of the financial damage COVID-19 will ultimately do to their incomes. Over 70% of respondents are expecting losses of at least 25%, while 20% are projecting losses of more than 75%.

The remaining questions provide a somewhat muddled view of the future. 44% of agents say they are expecting a significant negative impact on the real estate market in general (42% expect slightly negative effects), but 85% think the post-lockdown recovery will take 12 months or less. 41% of realtors surveyed feel the recovery will be complete in three to six months. But a not insignificant 13% say the recovery could take up to two years.

Ruth Krishnan of Krishanan Team in San Fransciso says that while sales activity has fallen by half because of the city’s strict stay-at-home order, business is already picking up.

“We’ve sold six or seven homes in the last few weeks,” she says.

“I suspect what we’re going to see by the end of the year is a good, solid level of activity. As far as being worried or anxious, I’m not at all.”

Krishnan says the San Francisco market had softened slightly before COVID-19 and that those conditions should continue.

Bramlett, for his part, believes the bottom might be hit as early as a few weeks from now.

“I believe we'll look back at April and May as the valley of this recession, at least for contracts written,” he says.

“It's still early to predict with accuracy.”

Source: Mortgage Professional America 5/8/2020 Author: Clayton Jarvis

Americans are buying homes again, mortgage data shows

Purchase applications gain 6% while mortgage refinancing’s drop, MBA says

Americans are returning to the housing market, as evidenced by a jump in applications for mortgages to purchase homes, though not at the same level as last year.

A seasonally adjusted index measuring purchase applications rose 6% in April’s last week, compared to the prior week, according to a report Wednesday from Mortgage Bankers Association.

Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California, according to Mike Fratantoni, MBA’s chief economist.

We’re still not back to where we were during last year’s spring market, he said, as about half of U.S. states begin resuming some level of economic activity amid the COVID-19 pandemic.

“Although purchase activity remains almost 19% below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for homebuying,” Fratantoni said.

MBA’s overall index measuring purchase and refinance applications advanced 0.1% on a seasonally adjusted basis from a week earlier while the group’s refinance index decreased 2% from the previous week – though it remained 210% higher than the same week a year ago.

The refinance share of mortgage activity decreased to 70% of all applications from 72% the previous week, Fratantoni said.

Some of the decline in refi applications is due to pandemic-related job losses that restrict a homeowner’s ability to apply for a new loan, and some has to do with the terms of the mortgages lenders are offering.

“Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac,” Fratantoni said.

The share of applications for mortgages backed by the Federal Housing Administration fell to 11.1% from 11.5% a week earlier, the report said. The share for home loans backed by the Veterans Administration remained unchanged at 13.3%.

Source: Housing Wire 5/6/2020 Author: Kathleen Howley