Black Knight Launches Tool to Protect Mortgagees from ‘Super-Priority Lien’ Losses

first_img Demand Propels Home Prices Upward 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Black Knight Financial Services HOA Lien Pro Super-Priority Liens 2015-02-19 Brian Honea in Daily Dose, Featured, News, Technology The Week Ahead: Nearing the Forbearance Exit 2 days ago Florida-based data and analytics firm Black Knight Financial Services has come up with a solution to identify the risk associated with mortgages that have been given “super-lien priority” status, according to an announcement from Black Knight.Currently, 22 states allow homeowners associations a super-priority lien, which supersedes the mortgage of the lender or servicer. The super-priority status allows HOAs to foreclose nonjudicially (without going through the courts) on a property that is delinquent on HOA dues and subsequently sell the property at an auction, usually at a fraction of what the borrower owed on the mortgage. Thus, super-priority liens have often resulted in significant losses to the mortgagee.Black Knight’s new solution, HOA Lien Pro, helps protect servicers and investors from the losses that may result when an HOA exercises a super-priority lien on a property. HOA Lien Pro can identify which mortgage loans in a portfolio are subject to an HOA and then provide the mortgagee with the name and contact information of that HOA or property management company. This will allow the mortgagee to contact the HOA and resolve any deficiencies that may have arisen before an HOA foreclosure auction, according to Black Knight. The new tool also offers an estoppel letter service to help keep the mortgagee informed as to the property owner’s financial standing with the HOA, how much is owed in dues, and a projection of the amount and frequency of future payments.”Considering the explosive growth in community associations over the last 10 years, and the fact that 22 states now grant super-lien status to HOA assessment liens, this is a critical issue for mortgage servicers and the GSEs,” said Kevin Coop, president of Black Knight Data and Analytics, a division of Black Knight Financial Services. “HOA Lien Pro is a simple, cost-effective way to help mortgage servicers and investors reduce the risk of having their first lien positions extinguished by HOA super liens.”Many states granted super-priority liens to HOAs as a result of the housing crisis in order for HOAs to receive the funds they needed to maintain their communities. Currently, no central HOA database exists, which often leaves mortgagees uninformed as to which properties are subject to HOAs. HOA Lien Pro gathers its data from title plants, which are considered the highest quality source for accurate property information, according to Black Knight.The issue of the super-priority lien has been a hotly contested one in many states, but particularly in Nevada as of late. In September 2014, the Nevada Supreme Court made a much talked about ruling allowing HOAs to extinguish mortgages nonjudicially; several lenders subsequently appealed the decision.One case central to the Nevada Supreme Court decision involves a house sold in Las Vegas in 2007 with a mortgage loan for $885,000 originated by Bank of America. The owner defaulted on the loan a year later and Southern Highlands Community Association foreclosed on the property. The association sold the house at an auction in September 2012 to SFR Investments Pool 1 for $6,000 – the amount the homeowner owed in delinquent HOA dues. When Bank of America tried to schedule its own foreclosure auction on the house the following December, SFR Investments made a filing to stop Bank of America’s foreclosure auction, claiming that the mortgage had been extinguished when SFR bought the house in September.In December, the Federal Housing Finance Agency issued a statement warning organizations such as energy retrofit financing programs and homeowners associations that label mortgage loans with super-priority lien status that such loans will not push mortgages backed by Fannie Mae and Freddie Mac into the secondary position.  Print This Post Share Save Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Best Markets For Residential Property Investors 2 days ago Previous: Bipartisan Legislation Introduced to Create Independent Inspector General for CFPB Next: Zillow Completes Acquisition of Trulia Sign up for DS News Daily Home / Daily Dose / Black Knight Launches Tool to Protect Mortgagees from ‘Super-Priority Lien’ Losses Demand Propels Home Prices Upward 2 days agocenter_img Related Articles About Author: Brian Honea The Best Markets For Residential Property Investors 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Tagged with: Black Knight Financial Services HOA Lien Pro Super-Priority Liens Brian Honea’s writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master’s degree from Amberton University in Garland. Data Provider Black Knight to Acquire Top of Mind 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Black Knight Launches Tool to Protect Mortgagees from ‘Super-Priority Lien’ Losses February 19, 2015 1,009 Views Subscribelast_img read more

Survey: Flipping Trend Continues to Gain Momentum Among Investors

first_img Data Provider Black Knight to Acquire Top of Mind 2 days ago  Print This Post Demand Propels Home Prices Upward 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Tagged with: Auction.com House Flipping Investors Share Save The Week Ahead: Nearing the Forbearance Exit 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago in Daily Dose, Featured, Market Studies, News About Author: Brian Honea Home / Daily Dose / Survey: Flipping Trend Continues to Gain Momentum Among Investors The rising trend of home flipping around the country seen in Q4 continued to build momentum among investors in nearly every market surveyed in Q1, according Auction.com’s First Quarter 2015 Real Estate Investor Activity Report released on Monday.The percentage of investors surveyed who said they intended to flip the properties they bought rose by 6.5 percent in Q1 from the previous quarter, according to Auction.com. The rise of that trend was especially evident in the Western States, where the ratio of investors who preferred flipping as a strategy over renting was as high as three to one in some places. The percentage of investors in both California and Washington who said they preferred to flip was 75 percent, compared to 24 percent for renting. The percentage of flippers in Nevada and Idaho was 79 percent and 71 percent, respectively.“It seems clear that the unusually low inventory of homes for sale has led to higher home prices, which makes it challenging for investors to rent homes out at a rate that’s profitable, and still affordable for tenants,” Auction.com EVP Rick Sharga said. “So in states like California, Washington, Nevada, and Arizona a large number of investors have decided that the best opportunity today is to meet the demand of prospective homeowners by buying, fixing, and re-selling investment properties.”Overall, 53.5 percent of investors surveyed said they preferred flipping, while 44.8 percent said they intended to rent the houses they purchased. A larger portion of real estate investors (55 percent) and investors working on behalf of another investor (66.3 percent) said they intended to flip, while a majority of investors making a one-time purchase (66.9 percent) said they intended to rent.Auction.com’s survey was collected from investors who bid on properties both online and at live events nationwide during Q1. Investors purchasing at live events generally preferred flipping over renting (62.1 percent compared to 36.7 percent), while investors purchasing properties online tended to lean toward renting over flipping (54.5 percent compared to 43.5 percent).The majority of investors who purchased only one property per year preferred a hold-to-rent strategy (60.8 percent), while more active investors tended to prefer flipping. Fifty-nine percent of investors who purchased between two and 49 properties during the quarter said they intended to flip, as did 53.6 percent of investors who purchased 50 or more properties.”Historically, individual investors have owned over 95 percent of the single family homes available for rent,” Sharga said. “It looks like these investors are coming back to the market, and filling a growing market need for rental units.”Click here for a video commentary from Rick Sharga on the latest Auction.com survey. Data Provider Black Knight to Acquire Top of Mind 2 days ago Related Articlescenter_img The Best Markets For Residential Property Investors 2 days ago Survey: Flipping Trend Continues to Gain Momentum Among Investors The Best Markets For Residential Property Investors 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Subscribe Servicers Navigate the Post-Pandemic World 2 days ago Demand Propels Home Prices Upward 2 days ago Previous: Fannie Mae’s 2015 Economic Forecast Unchanged Despite Q1 Setback Next: Gap Between Foreclosure Completions and Alternatives Widens Further Auction.com House Flipping Investors 2015-04-20 Brian Honea April 20, 2015 1,594 Views Sign up for DS News Daily Brian Honea’s writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master’s degree from Amberton University in Garland. last_img read more

Freddie Mac to Announce Q1 Financial Results Tuesday, May 5

first_img Earnings Reports Freddie Mac Profits 2015-05-04 Brian Honea Servicers Navigate the Post-Pandemic World 2 days ago Home / Daily Dose / Freddie Mac to Announce Q1 Financial Results Tuesday, May 5 Data Provider Black Knight to Acquire Top of Mind 2 days ago May 4, 2015 1,349 Views The Best Markets For Residential Property Investors 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Best Markets For Residential Property Investors 2 days ago in Daily Dose, Featured, Government, News Brian Honea’s writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master’s degree from Amberton University in Garland.  Print This Post Data Provider Black Knight to Acquire Top of Mind 2 days ago Related Articles Freddie Mac will be reporting its financial results for the first quarter of 2015 on Tuesday, May 5, according to an announcement from the GSE.The results will be announced before the U.S. financial markets open via a conference call at 9 a.m. Eastern time on Tuesday, May 5. The call will be webcast and can be accessed by clicking here.A replay of the webcast, and all other information related to the conference call or Freddie Mac’s Q1 results, can be accessed by clicking on the Enterprise’s investor relations page.Freddie Mac reported a net income of $227 million for the fourth quarter of 2014, a decline of $1.9 billion from the third quarter. The GSE attributed the drop in net income to derivative losses, which totaled $3.4 billion for the quarter driven by declining interest rates.For the full year of 2014, Freddie Mac reported a net income of $7.7 billion, down from $48.7 billion in 2013. Securities settlements and an accounting charge that were not present in 2014 boosted the 2013 income. Despite the substantial decline in net income, 2014 was the third straight year of profitability for Freddie Mac.CEO Donald Layton said that 2014 “marked another year of solid financial and operating performance” which allowed the GSE to return $20 billion to taxpayers. About $900 million was sent to Treasury, however, according to the terms of a 2012 amendment to the 2008 bailout agreement. The 2012 amendment that required GSE profits to be swept into Treasury while Freddie Mac and Fannie Mae remain in conservatorship of the FHFA has been a contentious issue among politicians and stakeholders in the housing market.Freddie Mac’s total payback as of December 31, 2014, is $91.8 billion, about $20 billion more than the GSE needed in the 2008 bailout.center_img Tagged with: Earnings Reports Freddie Mac Profits Share Save Previous: AACER: Bankruptcy Filings Continue April Decline; Total Has Fallen 47 Percent Since Peak Next: Training Tips: How (and Why) to Evaluate a New Vendor’s Internal Training Program Demand Propels Home Prices Upward 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago Freddie Mac to Announce Q1 Financial Results Tuesday, May 5 Sign up for DS News Daily Demand Propels Home Prices Upward 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago About Author: Brian Honea Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Subscribelast_img read more

Tiny Homes Could Help the Homeless

first_img  Print This Post The Best Markets For Residential Property Investors 2 days ago Tiny Homes Could Help the Homeless Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago Demand Propels Home Prices Upward 2 days ago Subscribe Related Articles Share Save Previous: Improving FHA Foreclosure Processes Next: California Bill Would Allow More Housing Near Transit Stops About Author: David Wharton Tagged with: Homelessness tiny homes Veteran Homelessness Veterans Demand Propels Home Prices Upward 2 days ago Sign up for DS News Daily Data Provider Black Knight to Acquire Top of Mind 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Home / Daily Dose / Tiny Homes Could Help the Homeless Servicers Navigate the Post-Pandemic World 2 days ago in Daily Dose, Featured, Government, Headlines, Journal, News Homelessness tiny homes Veteran Homelessness Veterans 2018-03-03 David Wharton Data Provider Black Knight to Acquire Top of Mind 2 days ago The Best Markets For Residential Property Investors 2 days ago Earlier this year, HUD Secretary Ben Carson announced an award of $2 billion in support of thousands of local housing and service programs across the U.S. This year’s installment of the annual HUD Continuum of Care grants will assist more than 7,300 local programs working to house and serve individuals and families experiencing homelessness in their communities. But even as communities around the nation struggle to figure out how to tackle the difficult problem of homelessness, one trend has been grabbing headlines by thinking small. Could tiny houses be just the thing to help the homeless get back on their feet?Several American communities are experimenting with “tiny home” programs to help relieve homelessness. As reported by CNN, the nonprofit Veterans Community Project (VCP) is working with Kansas City leadership to create a small community of tiny homes designed specifically to get homeless veterans off the streets. The Veterans Community Project has so far built 13 tiny homes, working to provide alternatives to the often-overcrowded local shelters that were leaving some veterans without a place to sleep at night. The tiny homes are fully up to code homes that are less than 300 square feet—designed as transitional housing for veterans on the way to more permanent homes.VCP co-founder Brandon Mixon told CNN, “We’re pulling these guys out of the trenches in their battle and saving their lives because they would have done the exact same for us. They could have been that guy that saved my life in Afghanistan or pulled me to safety.”San Jose, California, is also experimenting with a “tiny homes” program for the homeless—or trying to, at least. The city’s housing department has recently been holding meetings to discuss moving forward on a tiny-homes community consisting of around “40 prefabricated sleeping units” for homeless residents who qualify for assistance but have not yet found a permanent place to live.Addressing local residents’ safety concerns about the proposed tiny-homes community, San Jose Mayor Sam Liccardo said, “We’ve got to get beyond the notion that it’s somebody else’s problem because the reality is the homeless are in all of our neighborhoods and they’re living with us. They’re part of our community. The only question is whether they’re going to house them.”Similar “tiny-homes for the homeless” projects are unfolding in communities around the country, including The Block Project in Seattle, Washington.The National Law Center for Homelessness and Poverty says that more than 3.5 million people are homeless or under-sheltered each year in America, a total which includes as many as 1.35 million children. Moreover, according to the National Alliance to End Homelessness, U.S. communities would need as many as 7 million more affordable living spaces to meet current homeless and low-income needs. Tiny homes won’t totally solve the problem, but it could be one more effective tool in the fight to relieve homelessness in America. March 3, 2018 24,029 Views last_img read more

Demand for Fannie Mae CIRT—’Among the Strongest Ever’

first_imgHome / Daily Dose / Demand for Fannie Mae CIRT—’Among the Strongest Ever’ Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Demand for Fannie Mae CIRT—’Among the Strongest Ever’ Share Save October 1, 2019 1,461 Views Servicers Navigate the Post-Pandemic World 2 days ago Sign up for DS News Daily Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Best Markets For Residential Property Investors 2 days ago Previous: The X Factor in Property Preservation Next: Examining Home Price Growth Related Articles Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer. Data Provider Black Knight to Acquire Top of Mind 2 days ago Subscribecenter_img About Author: Seth Welborn Servicers Navigate the Post-Pandemic World 2 days ago The Best Markets For Residential Property Investors 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago Fannie Mae recently announced that it has completed its sixth Credit Insurance Risk Transfer transaction of 2019, covering loans previously acquired by the company. The deal, CIRT 2019-3, covers $14.8 billion in unpaid principal balance (UPB) of 21-year to 30-year original term fixed-rate loans. According to Fannie Mae, this transaction is part of the GSE’s effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market.“With twenty-one insurers and reinsurers providing coverage, demand for this transaction was among the strongest we’ve ever had,” said Rob Schaefer, VP for Credit Enhancement Strategy & Management, Fannie Mae. “With this deal, the CIRT program reached an important milestone, having committed approximately $10 billion of risk transfer since the program’s first transaction in 2014. The successful growth and evolution of CIRT is founded on a partnership between Fannie Mae and participating insurers and reinsurers, reinforced by the transparency of the CIRT program and our leadership in managing single-family residential credit risk.”With CIRT 2019-3, which became effective August 1, 2019, Fannie Mae will retain risk for the first 40 basis points of loss on a $14.8 billion pool of single-family loans with loan-to-value ratios greater than 60 percent and less than or equal to 80 percent. If the $59 million retention layer is exhausted, reinsurers will cover the next 325 basis points of loss on the pool, up to a maximum coverage of approximately $479 million.Coverage for these deals is provided based upon actual losses for a term of 12.5 years. Depending on the paydown of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the one-year anniversary and each month thereafter. The coverage on each deal may be canceled by Fannie Mae at any time on or after the five-year anniversary of the effective date by paying a cancellation fee. Demand Propels Home Prices Upward 2 days ago Demand Propels Home Prices Upward 2 days ago in Daily Dose, Featured, Government, Loss Mitigation, News  Print This Post Tagged with: CIRT Fannie Mae Insurance Risk Data Provider Black Knight to Acquire Top of Mind 2 days ago CIRT Fannie Mae Insurance Risk 2019-10-01 Seth Welbornlast_img read more

The Week Ahead: Measuring Housing Debt

first_img Related Articles Servicers Navigate the Post-Pandemic World 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago February 7, 2020 1,127 Views On Tuesday, February 11, the New York Fed will release its household debt report. According to a survey from LendingTree, over half of all Americans feel burdened by various debt types, including mortgage debt.According to the survey, 12.4% of Americans are concerned about mortgage debt.  The report states that even though mortgage debt is the largest source of debt, people feel less burdened by it, as that type of debt is considered a “good debt” as it contributes to consumers’ financial future.Fourteen-percent of all millennials surveyed are concerned over mortgage debt—the highest among the three generations polled. Thirteen-percent of Gen X’s surveyed were concerned about mortgage debt and just 10% of Baby Boomers were worried.Credit card debt was the leading source of worry among those polled at 36.7%. Baby Boomers had the most concern over this segment at 44%. Twenty-nine percent of millennials were concerned about credit card debt.A report by LearnBonds in January found that mortgage debt hit a new record of $15.8 trillion in Q3 2019. This is the highest amount since the 2008 economic crisis when it stood at $14.7 trillion.The home mortgage sector rates showed a steady decline in recent years to hit a low of $13.3 trillion in the third quarter of 2013, and from the 2013 Q3, the debt has increased in a steady trajectory to hit the latest figures recorded in 2019. From the data, there was $401 billion in newly originated mortgage debt in 2018 Q4.“Generally, the mortgage is among the largest component of household debt across the United States,” LearnBonds notes. “However, the mortgage rates have been low since the last quarter of 2018. The Federal Reserve Bank resorted to lowering the rates in the wake of trade uncertainty which affected the global economic growth.”Here’s what else is happening in The Week Ahead:Jerome Powell Semiannual Monetary Policy Report to the Congress (February 11)Federal Budget (February 12) debt HOUSING 2020-02-07 Seth Welborn The Best Markets For Residential Property Investors 2 days ago in Daily Dose, Featured, Market Studies, News The Best Markets For Residential Property Investors 2 days ago Demand Propels Home Prices Upward 2 days ago Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer. Demand Propels Home Prices Upward 2 days ago Previous: OCC Testing Financial Institution Risk and Capital Next: Bonial & Associates Promotes Wes Kozeny, Paul Cervenkacenter_img Tagged with: debt HOUSING Servicers Navigate the Post-Pandemic World 2 days ago Home / Daily Dose / The Week Ahead: Measuring Housing Debt Data Provider Black Knight to Acquire Top of Mind 2 days ago  Print This Post The Week Ahead: Nearing the Forbearance Exit 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Sign up for DS News Daily Share Save The Week Ahead: Measuring Housing Debt About Author: Seth Welborn Subscribelast_img read more

The Times, They Are a’ Changin’: AI in Mortgage Servicing

first_img March 10, 2020 1,608 Views Editor’s note: This feature originally appeared in the March issue of DS NewsThere’s no doubt that we are living in times of accelerated change. If you look at how any industry has evolved over the past 100 years—whether it’s travel, communications, or entertainment—you will see a sharp contrast between how slowly things changed a century ago compared to how quickly they are changing today.As just one example, vinyl long-playing records, or LPs, were the standard for decades until the mid-1960s, when 8-track tapes and cassettes took over. Then came CDs in the 1980s, followed by digital music files in the early 2000s. Now most people stream their favorite music through online apps. LPs still exist, but their primary value is based on nostalgia.Eventually, everything changes, but some things take longer than others. Innovation such as artificial intelligence, machine learning and data capture technologies have taken hold in loan manufacturing but have been slower in adoption on the secondary marketing and servicing end of the market. Here they could be enabling faster, more efficient MSR acquisitions and onboarding of loans. Their potential to transform the secondary market is undeniable.The Costs of Yesterday’s TechnologiesAn abundance of diligence questions along with legacy systems with wildly differing customizations has led to a lack of any type of consistency or uniformity in how institutions behave in the secondary market today. As a result, an institution that sells loans of the exact same asset class to both Buyer A and Buyer B is going to have two totally different experiences. This lack of continuity really makes it cumbersome for all parties involved.There are advantages to using trading platforms, of course. They are, on the whole, a much more efficient way to manage capital market price, time of trade, and reduce trade fails. But these platforms do not address the validation of loan documents and data to identify any data inconsistencies. In a single file, you could have a piece of data that says one thing, and documents that say something else entirely—and no means to reconcile the two.Data ingestion is another factor that contributes to variability because of the fact some institutions have modified their systems so they are capable of boarding a sizable amount of data, while other institutions haven’t. Even though there is more loan data available than ever before, those that are slow to adopt have no place to store it—so they stick with spreadsheets or archive the trade tape, figuring that as long as they have the data somewhere, it’s okay.Most secondary market trading platforms have also failed to solve two of the biggest issues MSR traders face, the first of which is timing. Given how quickly prices change in the capital markets, spending days or weeks on MSR acquisitions can be costly and result in the loss of better opportunities.The second issue is the functional fulfillment of the loan and making sure that you bought what you thought you did. This is where things can get clumsy, given the overall lack of data quality and the high degree of variation in document ordering and naming from sellers. In the past, the spreadsheet became the great equalizer, using macros to map data and manual processes to determine if data was missing and to enter it into the buyer’s systems. That approach is neither accurate nor scalable.On the origination side of the business, consumer demand for a simpler, faster, digital experience has motivated lenders to adopt increasingly higher levels of automation. It’s quite a different story in the secondary market, where institutions have been slower to implement automated tools and seem to remain loyal to embedded manual practices. In fact, capabilities already exist that could enable institutions to conduct MSR trades and onboard loans in a fraction of the time it currently takes. With the increasing adoption of these new technologies, however, things are starting to change.Understanding AI’s ImpactOne of the most exciting things happening in the secondary market today is the emergence of AI technology, as well as machine learning tools, which are a subset of AI. AI describes technologies that analyze data and make decisions based on data patterns, whereas machine learning describes technologies that learn to distinguish patterns in data from human instruction and self-learning algorithms.In truth, AI and machine learning, while often talked about, are not as commonplace as many are led to believe. They can create the uniformity these institutions need through the data normalization they provide across sellers’ loan files, making it much easier to ingest documents and data accurately. This then can lead to the use of more sophisticated applications that can significantly help servicers and investors gain greater insights on their portfolios and their trading decisions, especially when determining where risk lies and which loans to sell versus which loans to retain.AI and machine learning technology also enable MSR traders to capture a greater amount of data off loan files and then automatically run business rules around that data. This eliminates the historic “stare and compare” methods of checking data and loan quality and greatly reduces the time and overall cost of due diligence. By green-lighting the vast majority of files in which the data can be trusted, companies can focus on exception-based processing, which allows them to move loans forward much more efficiently.A particular benefit of these technologies lies in the fact that different investors look for different data elements when determining risk. There’s a huge variation among loan purchasers in terms of the data elements that they are concerned about. Certain buyers require checks on 40 different data fields, while others may want to look at 30 or 50—there’s really no consistency among them. Their legal agreements all differ as well. If an investor needs to check 30 unique data elements when buying a pool of loans, they could do so in seconds using machine learning tools to aid the process, rather than spend several days poring over them by hand.These tools are also great for filtering loans. For example, if I’m buying MSRs and I don’t want a large concentration of loans in a specific state or zip code because of the perceived risk involved, I can get that information with a click of a button. I could also build a view of key data elements that are important to me for the loans I’m acquiring and have this information presented in nanoseconds.New technologies also give sellers a huge advantage when it comes to market timing as well, which is a big deal in a rising rate environment. When you’ve made a commitment to sell a pool of loans and there is an agreement in place and a price locked in 10 or 15 days, and you don’t deliver the files in time, you’re at risk of having your loans repriced at today’s rate, which cuts into the premium you were expecting to receive. Because new technologies enable faster trades, the timing issue virtually disappears.When it comes to onboarding loans onto one’s servicing platform, buyers want to make sure there are no data defects and make sure they reach out quickly to borrowers to let them know they are their new servicer. Automated technologies allow them to make sure they have all the correct information, send out borrower letters and have staff reach out to borrowers much faster—servicers can even set up these processes with automated dialers and messaging. This saves an enormous amount of time and improves loan retention.How Momentum Is GrowingOver the past two years, we’ve seen a tremendous amount of pickup in machine learning and data extraction tools in the secondary market. Ultimately, I believe this will bring greater consistency to how the secondary market operates, as well as new best practices. Similarly, secondary market participants that invest in these new technologies won’t simply be able to absorb a great number of loan file types faster and more efficiently, they will also be able to build stronger, more efficient organizations that are better able to compete going forward.Yet there is a major obstacle that lies in the way that I haven’t talked about. Inertia. There’s an entire generation of secondary market professionals who grew up doing things a certain way and remain loyal to those processes—and the people who perform them.  There is a different way to think about this, as new technologies do not necessarily mean these jobs will go away. If institutions that both originate and service loans no longer need 30 acquisition team members to onboard newly acquired loans, but instead only need five, they can move their staff to the origination side of the business and have more flexibility to scale on either side as market volume ebbs and flows. It’s really a matter of reallocating your human resources to best utilize their skills to improve your business.Sometime in the future, there will be an inflection point at which participants will either adopt these new emerging technologies or put their companies’ futures at risk. Throughout the business world, there are countless examples of companies that are no longer around because they couldn’t keep up with the pace of accelerating change. It is naïve to think that it can’t happen in the secondary market.At the end of the day, it’s not a question of if the secondary market will embrace new AI and machine learning technologies, but when. The reduction in time, the cost savings, and the higher quality assets that will result from these changes are too great to ignore much longer. In any event, there will come a time when the predominant technologies used in the secondary market today will be looked at like yesterday’s vinyl records—minus the nostalgia. The Times, They Are a’ Changin’: AI in Mortgage Servicing Sign up for DS News Daily Craig Riddell is EVP, Chief Business Officer at LoanLogics. He is responsible for establishing and developing ongoing relationships with LoanLogics’ largest enterprise clientele, as well as leading the sales, marketing and account management functions. He can be reached at [email protected] About Author: Craig Riddell Share Save Demand Propels Home Prices Upward 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago The Best Markets For Residential Property Investors 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Previous: How Institutional Housing Investors Shaped Recovery Next: Industry Responds as Coronavirus Declared a Pandemic Demand Propels Home Prices Upward 2 days agocenter_img The Week Ahead: Nearing the Forbearance Exit 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Related Articles The Best Markets For Residential Property Investors 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Subscribe  Print This Post 2020-03-10 Seth Welborn Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Home / Daily Dose / The Times, They Are a’ Changin’: AI in Mortgage Servicing in Daily Dose, Featured, News, Print Features, Technology Servicers Navigate the Post-Pandemic World 2 days agolast_img read more

The Most Important Item in Your Digital Toolkit

first_img Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Best Markets For Residential Property Investors 2 days ago Sign up for DS News Daily Data Provider Black Knight to Acquire Top of Mind 2 days ago  Print This Post How many articles have you seen over the past year about the benefits of digital mortgages? At the time of this writing, Google News turned up 130 stories about digital mortgages in a single month. Those are just stories captured by Google—there are certainly countless more, not to mention a plethora of white papers, webinars, and eBooks all focused on the topic. Who has time to digest them all?There are many ways to go about adopting a digital mortgage strategy, and certainly reading up on the subject is a good place to start. But to be successful, there is no more important piece to the digital mortgage puzzle than having an experienced and trusted fintech partner at your side—a partner with the right blend of technology, resources, experience, and skills to fit your company’s needs and goals, and one that will take all those stories and synthesize them so they make sense to you.What Makes a Good Partner?A solid fintech partner is one that understands the intricacies of the digital mortgage process from all angles, from origination to pre-closing, closing, and post-closing. They also understand not only the technologies and services you need to achieve your goals, but also the needs and goals of your business partners and other relationships, so everybody is working toward the same plan.The right partner will work with you to determine which digital processes are right for your company. For example, do they have experience in the areas of your business, whether that is conforming and nonconforming loans, or both? Will they develop a relationship with you and create a timeline for adopting a digital strategy? During the relationship, will they act as your advocate throughout the entire project, not just through the implementation stage but during the production stage and beyond?Perhaps the most important question to ask a prospective partner is how much practical, digital experience they have. Do they have experts on staff who have developed and implemented fintech solutions for companies like yours? Do they understand digital processes and their impacts from the perspective of all life-of-loan participants? And will they educate and train your team and your partners on an ongoing basis?Truly effective partners are constantly innovating to incorporate new technologies, as well as staying abreast of new data interchange standards, best practices, and innovations.The Importance of SMART DocsPerhaps the most critical attribute a digital partner must possess is a deep understanding of the impact of eNotes on all parties, throughout the life of a loan. That includes your trading partners and their trading partners, too.A capable partner will be able to deliver documents in a standard data format, which requires access to a doc engine built entirely on SMART Docs. This is an important point, as many outsourcing providers use PDFs instead of SMART Docs, and PDFs are not nearly as efficient or accurate.Before a borrower can electronically sign a PDF file, for example, someone must manually ‘tag’ the file to accept the borrower’s signature. PDFs can’t be read by machines with 100% accuracy, either, which means they are reviewed by humans for errors. These extra steps are inefficient and introduce opportunities for error.A good partner will provide a complete library of SMART Docs that encompass all types of loan documents. Because SMART Docs can also be rendered in PDF, they allow you to choose XML or PDF for each doc type. They also allow you to change that mix to meet borrower and trading partner demands. While many providers concentrate on just having the note be a SMART Doc, having access to an entire library of SMART Docs enables truly digital versions of every document so they can be electronically reviewed for due diligence after they are executed.The ideal partner will offer a wide range of mortgage services beyond eClosings. By being able to take on loan application, underwriting, and due diligence services through closing, delivery, custody, and secondary stages, a capable partner can help you better manage staffing levels, especially when there is a rapid increase or decrease in volume. If your partner offers these types of services, they should have digital capabilities imbedded into them.Where to Start Your SearchSo, where to find capable partners? Two of the best sources are the eMortgage vendor lists that are maintained by Fannie Mae and Freddie Mac.The GSEs have conducted actual tests with the eNote delivery systems. If a vendor is on the list, that means the GSE has worked with them to ensure their technologies were developed to meet the GSEs’ requirements. While neither Fannie Mae nor Freddie Mac will endorse any vendor—they encourage companies to conduct their own due diligence when selecting a vendor—the GSEs are a great place to start.Identifying the fintech partner that fits your needs takes time and effort. But, as Mary Poppins would say, “Well begun is half done.” Of course, learning how to “begin well” can be confusing. That’s why it’s best to choose a partner that will educate you on the concepts and possibilities. Let them keep up with the articles and white papers, customize all that information to your needs, and put all the pieces together for you. Once you do, you’ll be “well begun” and well on your way to success. Share Save March 19, 2020 9,225 Views Previous: REITs Aren’t Dead Next: Single-Family Homes are Shrinking About Author: Katie Paolangeli Home / Commentary / The Most Important Item in Your Digital Toolkit Governmental Measures Target Expanded Access to Affordable Housing 2 days ago FinTech 2020-03-19 Seth Welborn in Commentary, Daily Dose, Featured, News, Print Features, Technology Servicers Navigate the Post-Pandemic World 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Katie Paolangeli is the SVP, Product Management of eMortgage Technology for Evolve Mortgage Services. A former VP of eCommerce for MERSCORP, Paolangeli has more than 30 years’ experience in mortgage technology and has participated in dozens of panels, webinars, presentations, and training sessions on the topic of electronic mortgages. She can be reached at [email protected] The Week Ahead: Nearing the Forbearance Exit 2 days ago Demand Propels Home Prices Upward 2 days ago The Most Important Item in Your Digital Toolkit The Best Markets For Residential Property Investors 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Related Articles Tagged with: FinTech Demand Propels Home Prices Upward 2 days ago Subscribelast_img read more

Navigating Distressed Asset Investment

first_imgHome / Daily Dose / Navigating Distressed Asset Investment  Previous: The Push for Policymakers to Utilize ‘Groundbreaking’ Housing Data Next: Industry to Convene for Five Star Virtual Conference Demand Propels Home Prices Upward 2 days ago Subscribe Servicers Navigate the Post-Pandemic World 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Best Markets For Residential Property Investors 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago This story originally appeared in the September edition of DS News, out now.Turbulent times create opportunities and uncertainty. How do you identify what is a potential good investment versus a risky bet? Operational expertise and track record should be required from investors who are presented with opportunities in uncertain times. Asset-backed investments can provide excellent returns and reduced risk if sourced, priced, and managed effectively. Mortgage and real estate have always provided good returns but can be especially profitable during uncertain times. The Non-Performing Loan: 2020 outlook  The cracks in the U.S. economy started to appear before COVID-19 in March, laying a foundation for increased opportunity in NPL. However, the COVID-19 onset has changed the landscape quite dramatically. The HUD HECM auction scheduled for mid-March—an auction of defaulted reverse mortgage loans where the properties are vacant and the borrowers deceased—was postponed as COVID-19 came to a head. From mid-March till June, the non-QM mortgage market collapsed and fix-and-flip lenders started seeing increased defaults and late pays. As we head into Q3 2020, we are seeing a dramatic increase in defaults on previously modified mortgage loans as well as REO. From a portfolio manager’s perspective, a lack of transparency of how COVID-19 will play out over the next 24 months is very concerning. Portfolio managers base their models and expectations on assumptions generally agreed upon by their peers to forecast cash flow and performance. There is very little consensus on what the next 24 months will look like, causing forecast models to vary widely. As we head into Q4 2020, portfolio managers of large, mortgage-related, asset-backed investments will have to pick a track and execute a risk mitigation effort to gain certainty on 2021 performance. Because of this, we should see a good amount of NPL and REO come to market as risk managers look to reduce their exposure on a subset of high-risk assets and start fresh in the new year. The biggest question that industry professionals must ask themselves is how the market will look further into the year. The first point to that discussion is that COVID and its consequences will stay for at least 24 months. The latest long-term mortgage default projections from many analysts is now hovering around the 7% range along with an unemployment rate of anywhere from 9–12%. Mortgage defaults will most likely hit FHA the hardest along with formerly modified mortgage loans. However, the long-term numbers will depend on 1) the expiration of the supplemental unemployment benefits that occurs at the end of July, 2) a further increase in the unemployment rates, continuing jobless claims, and 3) potential decline in home values. Luckily for the economy, the unemployment rate estimations of 14% in April and 20% in May never came to fruition. In June, U.S. employers added 4.8 million new jobs and the unemployment rate dropped to 11.1%. Still, the Federal Reserve experts expect the unemployment rate to stay in the 9–12% range for at least 24 to 36 months. The second straight monthly increase in retail sales reported by the Commerce Department on July 16 is mostly attributed to the government’s additional weekly $600 checks for the unemployed, a benefit that ended on July 31. The program expiration will leave millions of gig workers and the self-employed, who do not qualify for regular state unemployment insurance, without an income. The growing amount of NPL and REO trend will be developing towards the third and fourth quarters of this year. I believe the HECM auctions will continue unimpacted by the COVID issue, and I anticipate increased delinquency on FHA portfolios due to the lower underwriting criteria as this product is designed to increase homeownership in underserved communities. Unfortunately, these types of borrowers may be more susceptible to job loss during the COVID crisis. FHA loans are now about 20% of the origination space, compared to about 2% of origination in pre-2008. After the Big Crash—NPL Market Health Check    The distressed assets environment in 2020 looks stronger compared to 2008. “We’ll see a consistent flow of NPL and distressed debt over the next 18 to 24 months. That means a steady flow and lots of opportunities to deploy capital. The 2008 distressed market was caused by the financial crisis, poorly underwritten loans, and slow government reaction. It resulted in a big and fast crash with very steep value declines. The 2020 financial markets are strong despite seeing an increase in distressed assets. The stock market continues to do well, bouncing back after COVID. The sharp rebound in June was followed by new records in July, with the S&P 500 coming back to the pre-pandemic levels and the Nasdaq 100 jumping to the most since April. Home values remain strong and there is no indication of sharp value declines in the coming months. Some housing bubbles may appear due to the immediate shut down of the economy in March and the increase of home buyers scrambling take advantage of the low interest rates in May and June. It will be interesting to see the results of the rush to buy homes in May and June in combination with forbearances expiring in July. The result of increased home purchases with increased defaults may cause a short-term dislocation in the market. No matter what, we’re not catching a falling knife, as we used to say when we bought NPL back in the 2008 crash. In the 2008 crash it was a race against the clock to liquidate or get assets re-performing because home values were dropping so quickly. Low interest rates also provide stability in a distressed marketplace. Low interest rates keep the housing market active, thereby creating liquidity as we put homes back on the market for re-sell. Interest rates are at historic lows and they are not expected to increase anytime soon. Steady home values, low interest rates, and an elevated unemployment rate have created a very stable distressed investment landscape. The distressed market is usually accompanied by an unstable environment susceptible to swings the marketplace similar to what we saw in 2008. Today is a great time to be in the distressed asset space. There are going to be plenty of opportunities, and we have a stable financial market. However, finding the right operating partner who has the experience and track record to manage assets in this type of environment can make or break your investment strategy. Checklist for Your Operating Partner  Fresh-faced and eager “distressed asset managers,” thinking of the distressed space and the opportunities when jumping from one industry to another, sometimes decide that this is a great time to deploy capital and get outsized returns. Those managers generally miss the opportunities with many of them not surviving the current cycle, let alone the next one. To pick the right operating partner you want to look at track record and history. You don’t want to partner with someone who is just building a platform for this particular environment. You want to look for a partner that is in this space indefinitely. Here’s a checklist for the investor looking for the right operating partner: Track record. The asset manager should have been in existence for several cycles, not just created for the current environment. Infrastructure. Nationwide counterparty, attorney, servicer, legal, broker, and contractor networks. Technology. Technology that creates transparency and risk management is required in this asset class. The asset manager must have a way to manage a high volume of data and counterparty relationships. Strong Balance Sheet. There should be a decent amount of assets under management or on the balance sheet. Experience in Structuring Different Types of Deals. There should be a diverse history of successful deal structures depending on the investor’s interests—either joint ventures, LLCs, trust, or Reg B formats.  Related Articles About Author: Louis Amaya Demand Propels Home Prices Upward 2 days ago 2020-09-10 Christina Hughes Babb September 10, 2020 2,028 Views The Best Markets For Residential Property Investors 2 days ago Louis Amaya co-founded and is the CEO of PEMCO Capital Management. PEMCO Capital Management provides an institutional platform for investors to gain exposure in niche sectors within the distressed residential mortgage and real estate markets. Over the firm’s history, PEMCO Capital Management has supported the acquisition and management efforts for prominent commingled and single-investor family offices, hedge funds, institutional investors, and private equity funds. PEMCO is now launching a Reg D fund to allow retail investors to participate in the funds institutional platform. Amaya is also the founder and host of Capital Markets Today, a podcast focusing on real estate and mortgage capital markets. in Daily Dose, Featured, Print Features Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago  Print This Post Share Save Sign up for DS News Daily Navigating Distressed Asset Investment last_img read more

How High Did Serious Delinquency Rates Climb This Summer?

first_img How High Did Serious Delinquency Rates Climb This Summer?  Print This Post Home / Daily Dose / How High Did Serious Delinquency Rates Climb This Summer? Demand Propels Home Prices Upward 1 day ago The property information provider CoreLogic released its monthly Loan Performance Insights report for July 2020, which revealed that, on a national level, 6.6% of mortgages were in a stage of delinquency (30 days or more past due, which takes into account those in foreclosure). This represents a 2.8-percentage point increase in the overall delinquency rate compared to this time last year, when it was 3.8%.”To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency,” the company reports, “including the share that transitions from current to 30 days past due.”In July, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows, according to CoreLogic:Early-Stage Delinquencies (30 to 59 days past due): 1.5%, down from 1.8% in July 2019, and  down from 4.2% in April when early-stage delinquencies spiked.Adverse Delinquency (60 to 89 days past due): 1%, up from 0.6% in July 2019, but down from 2.8% in May.Serious Delinquency (90 days or more past due, including loans in foreclosure): 4.1%, up from 1.3% in July 2019. This is the highest serious delinquency rate since April 2014.Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, down from 0.4% in July 2019. The July 2020 foreclosure rate is the lowest for any month in at least 21 years.Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.8%, unchanged from July 2019. The transition rate has slowed since April 2020, when it peaked at 3.4%.Home values, according to the CoreLogic Price Index, are rising, yet, the report said, “unemployment levels in hard-hit areas remain stubbornly high, leaving some borrowers house-rich but cash poor. Despite the slow reopening of several sectors of the economy, recovery for other industries like entertainment, tourism, oil and gas have a more uncertain outlook for the remainder of 2020. With persistent job market and income instability, Americans continue to tap into savings to stay current on their home loans. But as savings run out, borrowers could be pushed further down the delinquency funnel.”Millennials, are among the many Americans taking advantage of low rates to either purchase their first home or upgrade their living situations,” said Frank Martell, president and CEO of CoreLogic. “However, given the unsteadiness of the job market, many homeowners are beginning to feel the compounding pressures of unstable income and debt on personal savings buffers, creating heightened risk of falling behind on their mortgages.”Added Dr. Frank Nothaft, Chief Economist at CoreLogic, “Four months into the pandemic, the 120-day delinquency rate for July spiked to 1.4%. This was the highest rate in more than 21 years and double the December 2009 Great Recession peak. The spike in delinquency was all the more stunning given the generational low of 0.1% in March.”While all U.S. states in July logged an increase in overall as well as serious delinquencies, pandemic hotspots Nevada, New Jersey, Hawaii, New York, and Florida were impacted the most, according to CoreLogic.By the same token, every U.S. metro area recorded at least a small increase in serious delinquency rates in July. Odessa, Texas—which has been hard hit by job loss in the oil and gas industry—experienced the largest annual increase. Laredo, Texas;  Miami; McAllen, Texas; and Kahului, Hawaii all experienced a large increase in serious delinquency.Authors of CoreLogic’s report stated that  “with industries like oil and gas projected to leave millions of jobs unrestored throughout the remainder of the year, we may expect to see continued increases in mortgage delinquencies.”For the full report, including regional data, graphics, and methodology, visit CoreLogic’s website. Related Articles 2020-10-13 Christina Hughes Babb About Author: Christina Hughes Babb Previous: The Industry Pulse: Forbearance Tools & Expanded Services Next: Estimating Property Damage Caused by Hurricane Delta The Week Ahead: Nearing the Forbearance Exit 2 days ago Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Servicers Navigate the Post-Pandemic World 2 days ago Subscribe Data Provider Black Knight to Acquire Top of Mind 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago The Best Markets For Residential Property Investors 2 days ago Share 1Save Demand Propels Home Prices Upward 1 day ago October 13, 2020 1,737 Views Data Provider Black Knight to Acquire Top of Mind 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago in Daily Dose, Featured, News Sign up for DS News Daily The Best Markets For Residential Property Investors 2 days agolast_img read more