Zillow: Over half of renters blame student debt for delay in buying a home

In a paper released at the beginning of this year, the Federal Reserve estimated that about 20% of the decline in homeownership among young adults could be attributed to increased student loan debts since 2005.

Based on the 2019 Zillow Group Report on Consumer Housing Trends released on Monday, that percentage may be a little low. 

The report surveyed 13,000 U.S. household decision-makers about their homes, including how they search for them, pay for them and what challenges they encounter along the way. Among these findings, there was a recurrent topic of debt holding back potential buyers. From medical and credit card debt to student loans, an increasing amount of Americans are putting off buying a home.

“More than two-thirds of renters have debt, and about a quarter of renters and homebuyers said their debt caused them to be denied either a rental agreement or a mortgage at some point. That impact was most commonly reported by those with medical debt, which has a unique capacity to bust budgets,” the report stated.

Specifically, half of renters and almost 40% of buyers surveyed said student debt caused them to delay buying a home. Not surprisingly, this factor weighs most heavily on younger generations, including Millennials and Gen Z, especially when trying to qualify for a loan.

“32% of Gen Z and millennial buyers said their debt caused them to be turned down for home financing, compared to 25% of Gen X and 8% of Boomer and Silent Generation buyers,” the report said. 

Beyond student debt, the report found that medical debt is causing renters to further put off buying a home. Of those surveyed, 63% of renters with medical debt said they couldn’t cover an unforeseen $1,000 expense. 

“When we focus on low unemployment and the strong economy, we often forget that in many ways the rising costs of life can erode most of those gains,” said Skylar Olsen, Zillow’s director of economic research.

“Health care has never been more expensive. Getting a college degree, a path more likely to lead to economic success for those able to get through it, has never been more expensive,” Olsen added. “U.S. housing values and rents have never been more expensive. While incomes, both at the high and low end, are growing, the pace hasn’t kept up with those crucial life expenses. That’s fact and Americans are feeling it.”

Source: HousingWire Magazine

Columbia Banking System will promote Clint Stein to CEO

The transition to Stein from Hadley Robbins is the result of a multiyear succession process, the Tacoma, Wash., company said. Robbins had succeeded the late Melanie Dressel.
Source: American Banker

Freddie Mac: September forecast hints at a strong housing market this fall

Although the nation’s trade war is projected to weaken future economic growth, Freddie Mac’s September Forecast indicates the housing market is likely to maintain its strength well into the fall.

“Despite fears of an economic slowdown, the housing market continues to be a bright spot in the economy,” said Sam Khater, Freddie Mac’s chief economist. “While mortgage rates have ticked up in recent weeks, they remain lower than they were a year ago which will help boost sales headed into the fall.”

According to the government-sponsored enterprise, U.S. GDP will average 2.2% in 2019, edging down to 1.8% come 2020.

The 30-year fixed-rate mortgage, which dropped to a 3-year low in August, will remain below 4% for the remainder of 2019.

“Concerns over the resolution of trade disputes have injected volatility into global bond markets. Investors have flocked to the safety and stability of U.S. Treasuries, pushing down interest rates,” the GSE writes. “As trade talks ebb and flow, rates follow. Despite the volatility in rates, we expect long-term rates to remain flat on average.”

According to Freddie Mac, the 10-year yield is expected to average 1.8% in 2020, falling from an annual average of 2.1% in 2019.

The company says these low rates will continue to boost home sales, as mortgage origination levels are predicted to climb
to $2.1 trillion and $1.8 trillion in 2019 and 2020, respectively.

Given the combination of increased housing demand and a projected upward tick in housing supply, Freddie Mac expects home sales to rise to 5.98 million in 2019, before reaching around 6.03 million in 2020.

“Lower rates have boosted the housing market.
Housing starts in August 2019 beat consensus estimates, increasing to 1.36
million units at an annual rate. The August level was the highest since 2007,”
Freddie Mac writes. “Higher starts should provide some desperately needed new housing
supply. We forecast annual housing starts to average 1.25 million in 2019,
increasing to 1.28 million in 2020.”

Source: HousingWire Magazine

Fiserv’s LoanComplete leverages AI, RPA for efficiency

Using valued resources wisely is paramount to success in the
current mortgage environment. Leveraging robotic process automation (RPA) and artificial
intelligence (AI) means lenders and servicers can automate manual, repetitive
tasks and use the expertise of mortgage professionals where it will make the
most difference.

LoanComplete by Fiserv uses RPA and AI to solve one of the most
common problems facing lenders and servicers who want to automate — the ability
to decode different kinds of documentation and use this information to automate
tasks typically performed by humans.

Using Intelligent Content Recognition
(ICR), which can classify both structured and unstructured data, LoanComplete
can automatically
identify documentation from loan packages, detect and identify the final
version of those documents, and accurately extract loan data to automate data
driven workflows.

The solution converts all pages of the document to text, allowing
it to then extract loan data information from borrower-supplied income
documentation, third-party documentation and other sources. The extracted data
is delivered to the business rules engine to automate manual steps that would
normally be performed by processors, underwriters and closers. The business
rules engine ensures data integrity, checks that data matches across all
required documentation and populates any missing or inaccurate data fields in
the LOS or Servicing System with the correct data.

LoanComplete uses loan data information to determine what
documents are required for a loan file based on conditional logic that
identifies whether documents are required or optional – one more way the LoanComplete
solution and AI lighten the workload for users, who would traditionally have to
do this themselves. The loan data information can include factors such as the
type of loan product, loan-to-value ratios, state specific documents and dollar
amounts.

As documents are received and processed through the Intelligent
Content Recognition software, LoanComplete automatically attaches them to the
Loan Audit Record within its system. The documents can also be automatically
delivered and imported into a LOS.

This automation has resulted in significant efficiency gains for
Fiserv’s LoanComplete users, with processing cycle times reduced by up to 50%.
In addition, by automating the review process and having users review only the
exceptions, onboarding audit and quality control times have been reduced by up
to 70%. Now, lenders can increase quality control audits from a sample size of
loans to a full, 100% review throughout the Origination lifecycle.  

“Implementing AI and RPA reduces the unproductive time mortgage
professionals used to have to spend reworking the loan by ensuring proper
documentation and data exist before moving onto the next stage of the
origination process,” said Gregg Lehman, Manager, Product Management, Financial
& Risk Management Solutions,  Fiserv.
“Alerting users of problems with the loan early in the process allows issues to
be addressed quickly instead of appearing and needing to be fixed after the
loan has already been closed and funded.”

LoanComplete:

  • Extracts income data from borrower-supplied
    paystubs and W-2s, checking for accuracy across documents and eliminating the
    need to stare-and-compare
  • Delivers missing income data to the Loan
    Origination System to eliminate the need for manual data entry
  • Summarizes for both users and auditors a
    complete and trackable loan record that demonstrates a record of compliance of
    all documentation received and audited throughout the Origination process.

The ICR capability is just one part of the larger LoanComplete
solutions suite, which includes the Comparalytics business rules engine,
LoanTracker Case Manager and Delivery Manager solutions. Learn more at Fiserv.com/LoanComplete.

Source: HousingWire Magazine

House GOP calls on CFPB to continue remittance rule exemptions

House Republicans are pushing the CFPB to continue to allow banks and credit unions to estimate exchange rates and fees for money transfers.
Source: American Banker

Treasury to allow Fannie Mae, Freddie Mac to retain $45 billion in capital

The Department of the Treasury and the Federal Housing Finance Agency announced Monday it will now allow the government-sponsored enterprises to retain up to $45 billion in combined capital as they prepare to leave conservatorship.

Earlier this month, Treasury Secretary Steven Mnuchin said the administration is currently looking to end the profit sweep of Fannie Mae and Freddie Mac.

Mnuchin explained that not only was President Donald Trump trying to
end the profit sweep, but he was looking to do it soon.

“We are actively negotiating an amendment to try to get it done by the end of the month,” Mnuchin said at the time.

Now, the FHFA and the Treasury made a joint statement saying the GSEs will be allowed to retain capital as the administration continues to work toward ending conservatorship.

“The enterprises are leveraged nearly 1,000-to-one, ensuring they would
fail during an economic downturn – exposing taxpayers once again,” FHFA
Director Mark Calabria said. “This letter agreement between Treasury and FHFA,
which allows the enterprises to retain capital of up to $45 billion combined,
is an important milestone on the path to reform.”

“FHFA commits to working with Treasury in the coming months to amend
the share agreements and further advance broader housing finance reform,”
Calabria said. “The reform goals include limiting the government’s role in
housing finance, increasing marketplace competition, focusing on affordable
housing and sustainable homeownership. The status quo is not an option. Now is
the time to act.”

Freddie Mac has repaid a total of $119.7 billion to the Treasury, exceeding its original draw during the financial crisis by about $48.1 billion. Fannie Mae has repaid a total of $181.4 billion, compared to $119.8 billion that it drew.

And the housing industry is already responding, commending the administration
for its decision.

“The Community Home Lenders
Association
strongly commends FHFA Director Calabria and Treasury Secretary
Mnuchin for their letter agreement to allow Fannie Mae and Freddie Mac to
significantly increase the amount of capital they are allowed to retain,” CHLA
Executive Director Scott Olson said.

And the National Association of Federally Insured Credit Unions said
this move is critical to ensuring the safety and soundness of the housing industry.

“The Treasury Department and FHFA’s decision to allow Fannie Mae and
Freddie Mac to begin retaining capital reserves is central to preserving the
safety and soundness of the housing finance system, and it will help place the
GSEs on stronger financial footing,” NAFCU President and CEO Dan Berger said.

Source: HousingWire Magazine

Data aggregators push back against notion they have a fraud problem

Fincen and others say third parties are proving to be treasure chests for crooks who create synthetic identities, but aggregators argue they help detect risk banks can’t see.
Source: American Banker

NAR: Americans want to buy more homes, but will economic uncertainty prevent them?

Although more than
half of Americans believe now is a good time to buy a home, many are cautious
about entering the market, according to the National
Association of Realtors
.

According to the
group’s Q3 HOME survey, 63% of Americans believe now is a good time to buy
a home. Of these respondents, 34% say they strongly
believe this to be a fact.

This reading, although promising, is still a decrease from last year’s percentage. During Q3 of 2018, a whopping 75% of respondents indicated the housing market’s purchasing conditions were favorable, even though mortgage rates then were higher than they are now.

Lawrence Yun, NAR’s chief economist said while optimism fared well this
quarter, the outlook also contains a degree of caution.

Mortgage rates are at historically low levels, so I see no sign of the optimism about home buying fading,” Yun said. “However, the fact that slightly fewer are expressing strong intensity compared to recent prior quarters is implying some would-be buyers have concerns about the direction of the economy.”

Earlier this year, a panel of more than 100 housing experts and economists announced they expected the nation’s next recession to hit as early as 2020.

Real estate brokerage company Redfin says the housing market, which remains strong, is unlikely to be a culprit or victim of the next recession. However, the company warns that doesn’t mean the industry will go unscathed.

“Whether
it happens this year, next year, or in 10 years, another recession is
inevitable,” Redfin writes in a report. “Regardless of when it comes, it’s
unlikely to have a large negative impact on the real estate market.”

That
being said, Redfin claims that some housing markets are more at risk of a
housing downturn than others.

According to the company, Riverside, California; Phoenix and Miami have
the highest risk of a housing downturn in the next recession. Homeowners and
sellers in these markets, like many around the country, risk the loss of financial security.

“If the U.S. enters a recession in the next two years, it will likely be caused by the global trade war,” said Daryl Fairweather, Redfin chief economist. “U.S. industries that rely on exports, like the automotive industry and the agricultural industry, would be the most vulnerable and susceptible to layoffs.”

“Homeowners who are laid off may not be able to continue covering their monthly mortgage payment and may be forced to sell their homes, Fairweather said. “And would-be homebuyers won’t feel so confident about making a big purchase when they don’t feel confident about their job security or their financial wellbeing.”

NAR’s data supports this claim as the HOME survey
indicates that market optimism slides based on homeowners’ income levels.

According to NAR, when respondents with incomes
under $50,000 were asked if now a good time was to buy, 54% answered
yes. Throughout the survey, answers in the affirmative grew as household
incomes increased.

In fact, in the $50,000 to $100,000 bracket, NAR says
64% of respondents said now was a good time to buy, and
among those polled with an income of $100,000, 72% agreed.

“Not surprisingly, as incomes increase, the process of buying a home is less of a strain,” Yun said. “This has always been the case, but in this third-quarter survey, we see it to an even greater extent – high earners are more open to buying a home.”

NOTE: The National Association of Realtors HOME Survey was administered
through TechnoMetrica. The survey was conducted from January 2019 through March
2019 and represents a total of 2,710 household responses.

Source: HousingWire Magazine

Regulators grant preliminary OK to Houston de novo

Gulf Capital Bank has received conditional approval from state and federal officials and could be up and running late this year or early next year, its organizers say.
Source: American Banker

NAHB: Single-story home construction increased in 2018

Two-story homes are still more popular among homebuilders than single-story homes, but that gap is shrinking.

According to newly released analysis by the National Association of Home Builders, the share of new homes with two or more stories fell from 55% in 2017 to 53% in 2018, while the share of new homes with one story grew from 45% to 47%.

That means that the ratio between single-story and multiple-story homes is decreasing.

Although one-story homes were found more common in non-metro areas and two or more story homes were found more common in metro areas, 2017 and 2018 saw a rise of one-story homes in both.

The rise in one-story homes was heavily concentrated in the South, where the shares of two or more stories homes climbed 9%, 7% and 7% in the South Atlantic, East South Central and West South Central, respectively. The West North Central is the only division for which the share of single-story homes declined from 2017 to 2018.

The Midwest also saw a demand for single-story homes; 57% of new homes started were one story. New homes in East South Central and West South Central were 55% and 60% one story, respectively.

The NAHB also found that home height preference varies by generation, and more notably, the desire for a one-story home rises with age. Only 35% of Millennials want a single-story home, while 55% said they wanted a two-story home.

Due to aging in place concerns, 80% of Baby Boomers said they wanted to live in a single-story home, as well as 53% of Gen Xers and 74% of Seniors. Only 38% of Gen Xers, 17% of Boomers and 21% of Seniors said they wanted to live in a multiple story home.

Put simply, as age increases, desire to climb stairs decreases.

Source: HousingWire Magazine