National Mortgage News - November/December 2020

Prepping for 2021

With an unusually high number of unknowns to factor in, mortgage industry leaders offer a peek at their playbooks for the next year.

The sector’s leaders are hoping for better in 2021, while not forgetting lessons learned about the market’s risks in 2020.

But an expected drop in refinancings as mortgage rates rise should more than cancel that out, resulting in declining overall volume through 2023.

Mortgage companies contended with an average of 1,316 fraud attempts per month in 2020, up from 1,280 in the previous year, according to the latest study by LexisNexis Risk Solutions.

Leadership from those entities confirmed this week that they will move forward with a plan to add a controversial 50-basis-point charge for refinancing.

While using the 30-day SOFR as its index, Freddie Mac structured the deal so it could shift to a one-month term if and when that rate is approved.

A total of 34 states have offered coronavirus-related rental or mortgage assistance, much of which is funded by the CARES Act, according to the National Council of State Housing Agencies.

As of the end of July, there were more than 1 million past-due mortgages not in forbearance plans, and the majority likely would have qualified for forbearance under the CARES Act.

As financial distress mounted, 12.4% of mortgagors missed payments across the second and third quarters of 2020 — and it could get worse, according to a study from the Mortgage Bankers Association.

The pandemic has turned stress-testing around liquidity from theory into an actual case study. And while lenders shore up their cash reserves, they explain why many have been hesitant to take advantage of Ginnie Mae's Pass-Through Assistance Program.

To continue providing liquidity for lenders, Fannie Mae lengthened the period in which it would continue the purchase of forborne mortgages and pools of mortgage-backed securities into 2021.

Getting ahead of the next wave of mortgage fraud calls for rock-solid systems with several protective tools deployed at once. But that only goes so far without the proper employee preparation.

The technology rolled out by the Department of Housing and Urban Development aims to provide lenders with immediate and expanded responses related to Federal Housing Administration insurance eligibility.

The agency’s consolidation of supervision and enforcement policy into one office could compromise the independence of those deciding when to investigate alleged wrongdoing by banks and others, critics of the move say.

The final consent order contained the largest penalty, for $1.8 million to be paid by Low VA Rates. In total, the CFPB has issued $4.4 million in fines for such marketing of VA loans.

Mortgage industry hiring and new job appointments for the week ending Oct. 23.

When the economy inevitably slides, leaders with a culture based on the mantra, "Treat people like family, and the money will take care of itself," won't need a miracle to survive.