Reduced Profits Sting Sellers

By CHUCK GREEN To home sellers who agonizingly watched the prices of their abodes recede recently, leaving a nasty gash in profits, there’s little to say but “ouch.” Want a touch of solace? Apparently, the waters are rippling with plenty of others in the same predicament. A first quarter 2023 U.S. Home Sales Report released by ATTOM showed that on median-priced single-family home and condo sales across the country, profit margins dipped to 44.2%, sagging from 48.7% in the fourth quarter of last year. A silver lining is that the typical investment return stayed relatively high. In fact, it was nearly double where it was four years ago. From the peak of 56.1% in the second quarter last year, the…

Closing The Gap: Fannie Mae’s Credit Building Program Finds Success

By KIMBERLEY HAAS A Fannie Mae program designed to help build the credit scores of renters is finding success. Launched in September, the Multifamily Positive Rent Payment Reporting pilot program allows property owners to share timely rent payment data with the three major credit bureaus. The goal is to accelerate the adoption of rent payment reporting so renters and prospective homebuyers with no or little credit can establish or improve their credit history. Lenders can incorporate that data when evaluating potential homebuyers. Leaders at Fannie Mae report that more than 263,000 rental units have been onboarded as of April 30. Over 10,000 renters in properties participating in the program have established credit for the first time and 58% of residents…

Multifamily, Commercial Lending To Drop 20% In 2023

The Mortgage Bankers Association has once again adjusted its commercial and multifamily lending expectations downward as economic uncertainty continues to constrain the market. MBA’s latest forecast shows commercial and multifamily borrowing falling 20% in 2023 to $654 billion, down from $816 billion in 2022. This is a $9 billion reduction from its January prediction. Multifamily on its own accounts for a 14% drop, slipping from $437 billion in 2022 to $375 billion this year. Apartment investment sales declined at the end of 2022 in response to the Central Bank raising interest rates. “Higher interest rates, uncertainty about property values, and questions about the outlook for the cash flows of some properties led to a slowdown in commercial real estate transactions…

Industry Reacts To FHFA’s DTI Rule Change

The Federal Housing Finance Agency has rescinded a rule changing upfront fees based on borrowers’ debt-to-income ratios. If it had gone through, the policy would have created an adjustment for DTIs higher than 40% that Fannie Mae and Freddie Mac would acquire. Back in March, the agency delayed the implementation of these fees to talk it through with industry leaders, who largely opposed the move. One major concern was that small lenders would be hindered by compliance: disclosure laws require lenders to alert borrowers of pricing throughout the application process, but a borrower’s income and expenses can change dramatically throughout the loan procedure, requiring an unmanageable compliance burden. The Community Home Lenders Association argued against the adjustment at the time,…

Leaders React To Mortgage Fee Changes As Debate Continues

By CHUCK GREEN Industry leaders and economists are sharing their opinions about changes to fees for loans backed by Fannie Mae and Freddie Mac after reports that homebuyers with good credit scores and substantial down payments will pay more so fees for borrowers limited by income or wealth can be reduced. The changes to the loan-level price adjustment matrix by officials at the Federal Housing Finance Agency went into effect on May 1 and are the target of two bills in Congress. Rep. Stephanie Bice of Oklahoma, vice chairwoman of the Republican Main Street Caucus, introduced the Free Market Mortgage Act. She said the changes will force homebuyers with good credit to pay more for their mortgages to subsidize loans…

Consumers Are Gaining Confidence That The Housing Market Will Turn In Their Favor

Consumers are becoming more optimistic that the housing market will turn in their favor in the coming year, though affordability concerns continue to weigh them down. Fannie Mae’s Home Purchase Sentiment Index (HPSI) jumped to its highest level since May 2022 in April, up 5.5 points to 66.8. This is the largest increase in more than two years. Every component increased month-over-month as consumers start to see the light at the end of the tunnel for their homebuying struggles. As the market is still seized by affordability concerns, the components remained negative, with the full index down 1.7 points YOY. However, more respondents say they expect the tide to turn in their favor. The component associated with mortgage rate expectations…

Rocket VP Of Public Policy: Goal Is To Reduce Barriers To Homeownership

By KIMBERLEY HAAS The new vice president of public policy at Rocket Central says his goal is to increase opportunities for people who have historically had difficulties achieving home ownership because of a host of barriers. Karan Kaul, a housing finance veteran who worked as a principal research associate in the Housing Finance Policy Center at the Urban Institute prior to joining Rocket, said that means focusing on first-time homebuyers, people of color, and low- to moderate-income borrowers. In a recent interview with The Mortgage Note, Kaul said a well-documented hurdle to homeownership is a lack of an adequate down payment, especially with the increase in home prices over the last decade. “So what can we do to make sure…

Mortgage Fee Changes Under Fire As Critics Cite Fairness

By KIMBERLEY HAAS Changes to fees for loans backed by Fannie Mae and Freddie Mac are under scrutiny after recent reports that homebuyers with good credit scores and substantial down payments will pay more starting May 1. Last week, The Washington Times published an article with the headline “Biden to hike payments for good-credit homebuyers to subsidize high-risk mortgages.” Author Dave Boyer, a White House correspondent, wrote that although the changes are part of the Federal Housing Finance Agency’s push to make housing more affordable, they will negatively impact traditional borrowers. “Mortgage industry specialists say homebuyers with credit scores of 680 or higher will pay, for example, about $40 per month more on a home loan of $400,000. Homebuyers who…

Are In-Person Appraisals On Their Way Out?

As technology improves, the concept of valuation modernization is gaining traction and some industry leaders say in a few years in-person appraisals could be a novelty instead of the norm. Last month, leaders at Fannie Mae announced an update to their selling guide which includes newly available valuation options. They said valuation modernization helps lenders, appraisers, and risk investors manage collateral risk more efficiently while also benefiting customers with greater appraisal accuracy, lower costs, and an increased speed of loan decisions. Matt Stepanovich, vice president of national sales, hybrid valuations and quality control at SingleSource Property Solutions, recently sat down with Editor Kimberley Haas to talk about what he is seeing. SingleSource, located in Canonsburg, Penn., is a nationwide service…

Housing Sentiment Sinks Closer To All-Time Low

Homebuyers and sellers were feeling pessimistic about the market last month due to affordability and job security concerns. Leaders at Fannie Mae said the Home Purchase Sentiment Index fell by 3.6 points in February, breaking three straight months of increases and pushing the index closer to a record low recorded last October. “The decline was partly driven by a substantial decrease in consumers’ sense of home-selling conditions, with most respondents who indicated it’s a ‘bad time to sell’ citing unfavorable economic conditions and mortgage rates as the primary reasons for that belief,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “With home-selling sentiment now lower than it was pre-pandemic – and homebuying sentiment remaining near its all-time…