Older Millennials Driving Refinance Surge

The refinance share for all loans closed to millennial homeowners in February was 34%, which is tied for the highest share since Ellie Mae began tracking this data in 2016.

Conventional loans represented 75% of all loans closed by this group for the month. The refinance share rose to 41% as average rates for this loan type fell to 3.86% from 3.98%.

The Ellie Mae Millennial Tracker now divides millennials into two groups—older millennials (between 30 and 40-years-old) and younger millennials (between 21 and 29-years-old). Older millennials accounted for 41% of all loans closed for millennials, compared to just 18% for younger millennials.

Younger millennials saw their average interest rate on all loans fall to 3.83% from 3.9% month-over-month. The average rates for older millennials fell monthly to 3.85% from 3.95%.

“Economic impacts due to coronavirus (COVID-19) played a role in lowering interest rates in February and millennial homeowners were quick to take advantage and refinance their mortgages,” said Joe Tyrrell, Chief Operating Officer at Ellie Mae.

“While rates are currently favorable for consumers, we’re closely monitoring how COVID-19, and the resulting rate cut from the Federal Reserve, will impact every step of the homebuying and refinancing process and, in turn, the mortgage finance industry. Lenders who have invested in the requisite technology will be better positioned to work with buyers and owners who are increasingly interested in taking these processes virtual.”

Ellie Mae also found the time-to-close for refinances dropped 12 days month-over-month, decreasing to 38 days from 50 days. Times to close on all loans by millennials in February dropped from 47 days to 41 days, on average.

Refinances may continue to grow as Freddie Mac reported that the average 30-year fixed-rate mortgage dropped to 3.33% for the week ending on April 2.

“Mortgage rates have drifted down for two weeks in a row and that drop reflects improvements in market liquidity and sentiment,” said Sam Khater, Freddie Mac’s Chief Economist.

“While the market has stabilized relative to prior weeks, homebuyer demand has declined in response to current economic conditions. The good news is that the pending economic stimulus is on the way and will provide support for both consumers and businesses.”

The prior weeks’ average was 3.50% and last year it was 4.08%.

Source: MReport 4/2/2020 Author: Mike Albanese

FHFA Approves Loan Processing Flexibility by GSEs

The Federal Housing Finance Agency (FHFA) authorized several loan processing flexibilities from Fannie Mae and Freddie Mac.

Flexibilities announced by the GSEsinclude:

Allowing desktop appraisals on new construction loans;

Allowing flexibility on demonstrating construction has been completed (alternative to the Completion Report);

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

Expanding the use of the power of attorney and remote online notarizations.

“These loan processing flexibilities will expedite loan closings and help keep homebuyers, sellers, and appraisers safe during this national emergency," said FHFA Director Dr. Mark Calabria.

A statement from Fannie Mae said, “our ability to serve our customers is a top priority.”

Among the modifications announced by Fannie Mae modifying the age of document requirements from four months to two months for most income and asset documentation and expanded use of remote online notarization.

Among the changes, Freddie Mac included modifications for its credit underwriting requirements. All changes are effective for mortgages with applications received dates on or after April 14, 2020, and will remain in place for mortgages with dates on or before May 17, 2020. Freddie Mac said sellers are encouraged to apply these updates to existing loans in process.

Freddie Mac also announced flexibility for new construction properties for purchase transactions. The announcement added that these temporary provisions are effective immediately for all mortgages in-process and remain in place for mortgages with application received dates on or before May 17, 2020.

The GSEs previously updated their Lender Letter to require that a borrower be evaluated for payment deferral prior to other mortgage loan modifications.

Freddie Mac has announced similar changes, with the Freddie Mac Payment Deferral program. According to the GSE, effective January 1, 2021, Freddie Mac will launch a loss mitigation solution for borrowers who became delinquent due to a short-term hardship that has since been resolved.

"Customers want deferrals on the front end, as a 'right now' option," said Courtney Thompson, SVP, Default Mortgage at Flagstar Bank.

"I think consumers would be much happier with the relief we could offer them if that deferral was available now."

According to Freddie Mac, the Payment Deferral is designed to provide relief to eligible Borrowers who have the financial capacity to resume making their monthly payments, but who are unable to afford the additional monthly contributions required by a repayment plan.

Source: MReport 4/2/2020 Author: Mike Albanese

UWM tightens VOE standards as jobless claims rise-- Adds day-of-closing VOE check

There’s been an uptick in the number of mortgage loans falling out as they approach closing — even up to the day of closing. That’s because jobless claims doubled to their all-time high in just a matter of weeks, and borrowers who were employed at the start of their loan process may have lost their jobs very recently.

A total of 6.65 million people filed jobless claims in the week ended March 28, the Labor Department said on Thursday. That’s up from the prior record of 3.31 million for the previous week, which was revised upward.

To manage the surging number of recently unemployed borrowers, United Wholesale Mortgage has tightened its underwriting standards on verifying income and employment, re-verifying employment status on the day of closing.

“We’re doing them again right before closing to make sure that people still have jobs, because people are losing jobs at such an alarming rate right now,” UWM CEO Mat Ishbia told HousingWire.

“And so we put an extra process in place, which most people actually appreciate and recognize, but some people probably don’t love it.”

Under regulatory guidelines, it is acceptable to verify employment up to 10 days before closing, but UWM is operating out of an abundance of caution.

“It’s a little bit less business because we put a couple overlays in place to protect in this unprecedented time,” he said.

“I think all lenders are doing that. I want to do more loans. But I’m not going to do more loans if they’re unemployed; we’re just doing prudent underwriting.”

Ishbia said that after UWM implemented these standards, other lenders quickly followed suit. In fact, he said he expects that over the next 90 days, every lender will be following these standards.

According to the company, adding this extra step has not slowed down their process or time to close. Ishbia said that currently about 7% of its staff, or 400 of his 5,800 employees, are focused solely on VOE.

“It’s not slowing down the process at all, we’re closing loans on average about 15 days or less,” he said.

And as lenders are already beginning to adopt tighter protocols, Ishbia said this underwriting standard is likely to become widespread.

“I think the key here is UWM is the first one out with prudent underwriting standards that might become the new norm,” he said.

Source: Housing Wire 4/2/2020 Author: Kelsey Ramirez