Guardian Residential Lending Industry News, September 17-24, 2020

Guardian Residential Lending Industry News, September 10-17, 2020
September 17, 2020
Guardian Residential Lending Industry News, September 24 – October 1, 2020
October 1, 2020
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In the Know: A Roundup of This Week’s Local and National Real Estate Stories

Home Sales Surge to Best Levels in 14 Years (Mortgage News Daily, Sept. 22)

Existing home sales continued on a roll for the third consecutive month, hitting the highest level in August since December 2006.


FHFA Says 2-Month House Price Gain was Largest Ever (Mortgage News Daily, Sept. 23)

“U.S. house prices posted a strong increase in July,” said Dr. Lynn Fisher, FHFA’s Deputy Director of the Division of Research and Statistics. “Between May and July 2020, national prices increased by over 2 percent, which represents the largest two-month price increase observed since the start of the index in 1991.  The dramatic increase in prices this summer can be attributed to the historically low interest rate environment and rebounding housing demand even as the supply of homes for sale remains constrained.”


Housing market stays hot into fall with mortgage applications up 6.8% (HW, Sept. 23)

Refinances led the way, snagging almost two-thirds share of mortgage activity

The refinance index continued its upward climb, gaining 9% last week and jumping 86% higher than the same week one year ago. Refinances also reached a nearly two thirds share of mortgage activity last week, increasing to 64.3% of total applications from 62.8% the week prior.

According to Mike Fratantoni, chief economist and vice president of research and technology at MBA, 2003 was the last time refinance activity was as high as the $1.75 trillion the MBA is forecasting for 2020.


Fannie’s Forecast Sees a Brightening Recovery (Mortgage Daily News, Sept. 21)

Fannie Mae has upgraded its forecast for the third quarter gross domestic product (GDP). It now expects growth at an annualized pace of 30.4 percent, up from the 27.2 percent the company’s economists predicted in August. They say that growth has clearly slowed from the days soon after the business shutdowns and orders to shelter in place were gradually lifted by states and cities in May and June, but more recent data points to a continued recovery.


The 2020 refi wave: Where activity is strongest, where it’s not, and what’s ahead (HW, Sept. 21)

The MBA expects a near 17-year high for refis in 2020, but the market may be cresting

Mortgage rates have reached record lows, driven by the unprecedented economic weakness, as well as the Federal Reserve’s substantial efforts to keep the economy afloat by cutting short-term rates to zero and purchasing more than $1 trillion dollars of mortgage-backed securities. Homeowners are benefitting from lower monthly payments, while lenders are struggling to manage high volumes – all during a time when their employees continue to work remotely, and many temporary origination flexibilities remain in place.


Homeowners gain over $620 billion in equity in second quarter (HW, Sept. 21)

Nation stays afloat as negative equity “underwater” drops 15% year-over-year


Pandemic Changing Homebuyers’ Priorities (The M Report, Sept. 22)

According to a recent Redfin report, homebuyers’ priorities are shifting due to the Coronavirus pandemic. Specifically, more homebuyers are looking to move away from the cramped and more expensive big cities to the far more affordable suburbs.


Refinancing Your Mortgage Is About to Get More Expensive (Wall Street Journal, Sept. 23)

Higher costs lurk even before the adverse market fee kicks in on Dec. 1. Here’s how to play it smart.

Amid historically low rates, refinancing is hot—though it got doused with some cold water on August 12, when the Federal Housing Finance Agency announced a significant new fee: All refinances backed by Fannie Mae and Freddie Mac , which the FHFA oversees, would be subject to the Adverse Market Refinance Fee, equivalent to 0.5% of the total loan amount, starting Sept. 1.

The fee is intended to help cover at least $6 billion of projected losses incurred by the Covid-19 crisis, the FHFA said in an August statement. Two weeks after the initial announcement, after an outcry from the mortgage industry, the FHFA revised its previous deadline, pronouncing that the start date for the fee would be Dec. 1.

Unfortunately, the way the fee will impact refinances is quite different from how even a savvy borrower might expect.  “This fee is not going to show up on the loan docs,” said Joseph Flannery, chief executive of San Francisco-based, a digital mortgage broker. Instead, Fannie and Freddie charge lenders the fee when they purchase the loans. Lenders have the choice of whether to pass the cost onto consumers or not; most will likely pass it on in the form of higher mortgage rates, most industry experts agree. The fee will account for roughly a 1/8th of a percentage point rate increase on 30-year-fixed refinances, said Mike Fratantoni, chief economist for the Mortgage Bankers Association.


Renovation loans get pandemic boost as homeowners want home offices (HW, Sept. 23)

The growing demand for FHA 203(k) by homebuyers and homeowners

Vexed by work-from-home arrangements owing to the COVID-19 pandemic, homeowners are taking the long view and rethinking floor plans. The reality is, home offices are no longer a luxury.

In the initial three weeks of public health lockdowns in March, according to Gallup, the percentage of employed Americans working from home doubled to 62%. Of these workers, three in five said they’d prefer to work from home when restrictions are lifted. Homeowners are serious about dedicating room for work.

There’s a mainstay in mortgage finance poised to help in working from home. The Federal Housing Administration’s 203(k) rehabilitation mortgage insurance program is designed for borrowers to renovate when they purchase or refinance.


Thanks for reading.