MReport July 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 33 of 67

32 | M R EP O RT FEATURE W e are now halfway through the year, with spring giving way to summer. Beyond visions of sunshine and backyard BBQs, the Biden administration recently passed the (mostly symbolic) milestone of 100 days in office. The occasion provides an opportunity for lenders to take stock of the current economic landscape, early impacts the administration has had on the market, and some practical takeaways for successfully navigating the next three-plus years. The Current Landscape L et's start with a brief look at the state of the economy, and the housing market in particular. It is crucial to note that the health and outlook of the economy is, at this point, largely dependent on the continued successful rollout of the COVID-19 vaccine. The econ- omy will continue to rebound as states, counties, and cities loosen restrictions on businesses, which is tied to the number of cases and vaccines administered. As I write this, the Centers for Disease Control & Prevention (CDC) cur- rently projects that a majority of the U.S. will be fully vaccinated by June 11. That news, along with falling rates of daily new cases has emboldened economists to rachet up their projections for the year. The latest Wall Street Journal survey pegs GDP growth for 2021 at a very robust 6.5%, heights not seen since the early years of the Reagan administration. Additionally, the MBA estimates a 2.8% drop in unemployment this year. The good news isn't limited to overall economic figures; the housing market continues to perform strongly, thanks in large part to the enduring low-interest rate environment. The National Association of Realtors (NAR) is predicting a 15.1% increase in existing home sales, along with a whopping 24.5% jump in new home sales. Home values have likewise continued to rise, even through the pandemic, and are expected to continue to increase through 2021. Researchers at Zillow recorded a 10.6% improve- ment in 2020 and predict another 10.4% increase this year. On the mortgage side, the good news isn't coming without change, however. Lenders and economists alike see the end of the refinance boom on the horizon, and the renewed focus on purchase transactions. MBA economists anticipate an 11% drop in refinance share, down to 48%; that decrease accompanies a slight uptick in purchase volume. Smart lenders are already shifting resources to invest more in their referral relationships as the refi volume begins to shrink. New Administration, New Realities C hange has clearly also ar- rived in the form of a new administration in Washington, D.C. For the lending community, the biggest impact is in the change in philosophy and execution at the Consumer Financial Protection Bureau (CFPB). A brief history lesson: in the early days of the CFPB, under Acting Director Richard Cordray in particular, the agency's aggressive posture to the mortgage industry (labeled "regulation by enforcement" by detractors) led to billions in fines and high-profile enforcement activ- ity. That approach changed under President Trump, with former CFPB Director Kathy Kraninger's desire to more slowly implement new rules, focus on clarity and transparency, and, ultimately, her "hope that [the CFPB's] empha- sis on prevention will mean that [it needs its] enforcement tool less often." With the election of President Biden, however, it seems clear that the CFPB will return to the Obama-era style of enforce- ment. On April 1, the CFPB, under Acting Director Dave Uejio (in preparation for Rohit Chopra, who has been nominated by President Biden as permanent Director), the agency issued an emphatic bulletin that put the mortgage industry on notice. The message, headlined "Unprepared is Unacceptable" in the CFPB's own press release, which focused on mortgage ser- vicers, covered eight major areas of concern, including: • Reasonable diligence efforts for borrowers who need additional assistance • Contacting borrowers towards the end of their forbearance plans to assess their needs • Complying with the Equal Credit Opportunity Act's anti- discrimination requirements, particularly for borrowers with limited English proficiency and when evaluating income sources in the loss mitigation context • Promptly handling loss mitiga- tion inquiries and ensuring there aren't unreasonably long wait times during phone calls (in this regard, the CFPB specifically notes that it will scrutinize servicers whose hold times are significantly longer than industry averages) • Policies and procedures that ensure effective continuity of contact processes • Compliance with Regulation X's loss mitigation requirements • Compliance with all federal and state foreclosure restrictions • Compliance with the CARES Act's amendments to the Fair Credit Reporting Act for bor- rowers who have received a COVID-19-related payment accommodation On the mortgage side, the good news isn't coming without change, however. Lenders and economists alike see the end of the refinance boom on the horizon, and the renewed focus on purchase transactions.

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport July 2021