TheMReport — News and strategies for the evolving mortgage marketplace.
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60 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT Spring Economic Growth to Support Housing Market Fannie Mae's latest commentary finds that despite a rise in rates, housing growth will remain level, as the warmer spring weather brings with it growth in the economy. A s the weather warms and COVID-19 vac- cines roll out to more around the country, U.S. economic expansion is expected to accelerate this spring, with real GDP growth hitting 8.4% in Q2 and 6.6% for the full year before moderat- ing in 2022, according to the latest commentary from the Fannie Mae Economic and Strategic Research (ESR) Group. Home sales are likely to be minimally affected by rising mortgage rates to date according to Fannie Mae, though a further jump in record-low mortgage rates remains a risk. Mortgage originations are likely to be adversely affected, however, due to the weakening of refinance mortgage demand. In 2021, the refinance share of origination activity is forecast to dip to 54%, down from 64% in 2020; and by 2022, the refi- nance share is expected to hit 39%, as rates rise and the pool of outstanding mortgages with an incentive to refinance continues to decline. Purchase demand, meanwhile, is expected to remain relatively steady over the next few months, with $1.82 trillion expected in 2021, up from $1.61 trillion in 2020, and another $1.80 trillion expected in 2022. "At the moment, economists' eyes are on interest rates given the size of the recent increases to Treasury and mortgage rates and the short time period over which those changes occurred," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Perspective is helpful here: While we forecast some continued upward move- ment, mortgage rates remain historically low, as they are still 0.8 percentage points below the 2019 average. Underlying Treasury rates have risen, though lenders have absorbed some of the rise by shrinking spreads, as confirmed by our recent Mortgage Lender Sentiment Survey results. While the rate rise will curtail refinances to some degree, 2021 is poised to be a good year overall for housing activity and housing finance, as the economy continues to recover and COVID-19 restrictions ease. We expect a brisk acceleration in economic growth in the com- ing months. As always, there are downside risks to our forecast, and many center around mon- etary and fiscal policy impacts on interest rates going forward." Streamlining Federal Mortgage Relief Measures FHFA announced that it will do its part to help coordinate efforts across the federal government to assist struggling homeowners. T he Federal Housing Finance Agency (FHFA) has announced exten- sions of several measures that the agency says will align COVID-19 mortgage relief policies across the federal government. This announcement, which ex- tends temporary measures (previ- ously set to expire March 31) until the end of June follows the White House's February 16 moratoria extension applied to all federally- backed mortgages through the same period. The extended moratoriums on single-family foreclosures and real estate-owned (REO) evictions ap- plies to GSE-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by Fannie or Freddie through foreclosure or deed-in-lieu of foreclosure transac- tions. FHFA also announced that borrowers with Fannie Mae or Freddie Mac-backed mortgages may be eligible for an addi- tional three-month extension of COVID-19 forbearance. This additional three-month ex- tension allows borrowers to be in forbearance for up to 18 months. Eligibility for the extension is limited to borrowers who are in a COVID-19 forbearance plan as of February 28, 2021, and other limits may apply. Further, COVID-19 Payment Deferral for borrow- ers with an Enterprise-backed mortgage can now cover up to 18 months of missed payments. COVID-19 Payment Deferral allows borrowers to repay their missed payments at the time the home is sold, refinanced, or at mortgage maturity. "Borrowers and the housing finance market alike can benefit during the pandemic from the consistent treatment of mortgages regardless of who owns or backs them. From the start of the pan- demic, FHFA has worked to keep families safe and in their homes, while ensuring the mortgage market functions as efficiently as possible. Today's extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the fed- eral government," FHFA Director Mark Calabria said. The actions mark the latest in a series of steps FHFA has taken to assist homeowners and the mort- gage market during the pandemic. FHFA noted that it may extend or sunset its policies based on updated data and health risks. Homeowners and renters can visit ConsumerFinance.gov/hous- ing for up-to-date information on their relief options, protections, and key deadlines.