MReport April 2022

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42 | M R EP O RT SERVICING THE LATEST 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 Mr. Cooper Acquires Residential Portfolio of Community Loan Servicing In addition to the servicing of approximately 140,000 residential mortgage loans, Mr. Cooper Group will add more than 500 CLS employees to its team under new deal. M r. Cooper Group has signed an agree- ment with Commu- nity Loan Servicing (CLS)—a subsidiary of Bayview Asset Management—where Mr. Cooper will assume the servicing of approximately 140,000 residen- tial mortgage loans. Terms of the transaction were not disclosed. In addition, more than 500 CLS employees will join the Mr. Cooper Group team, with the transaction expected to close in Q2 of 2022. At that time, Mr. Cooper will wel- come CLS' customers and team to the Mr. Cooper Group family. The Community Loan Servicing commercial servicing operations will remain under Bayview Asset Management. and will retain the Community Loan Servicing name. "This transaction furthers our strategic goals with additional portfolio growth and expanded default servicing capabilities," said Mr. Cooper in a statement. "With the addition of the CLS team and their platform, we will be in an even better position to help home- owners who need extra support to keep their dream of homeowner- ship alive. We look forward to welcoming these customers and team members to the Mr. Cooper Group family." In addition to the recent ap- pointment of Paypal VP and CDO Daniela Jorge to its Board of Directors, Mr. Cooper also announced a partnership with Sagent, where Sagent will buy certain intellectual property rights related to Mr. Cooper's proprietary, cloud-based technology platform for mortgage servicing, and Mr. Cooper received an equity stake in Sagent. Underwater Mortgages Drop to Lowest Level in Over a Decade Home prices rose 18% during 2021, the largest annual gain recorded in its 45-year history, generating a large increase in home equity wealth. C oreLogic released the Homeowner Equity Report for Q 4 of 2021, showing U.S. homeown- ers with mortgages experienced an increase in equity by 29.3% year over year. This number represents an overall equity gain of more than $3.2 trillion, and an average gain of $55,300 per borrower since Q 4 of 2020. According to CoreLogic's latest Home Price Index, year- over-year price appreciation also increased by 19.1% in January 2022, although growth is projected to slow gradually over the next year. Nationwide, home prices rose 18% year over year in Q 4 of 2021, up from the 8% annual gain recorded in Q 4 of 2020. The appreciation helped push the national negative equity figure to the lowest in more than a decade, with only 1.1 million homeowners underwater on their mortgages. Western state homeowners saw the biggest equity gains by dollar value, led by Hawaii, California, and Washington. "Home prices rose 18% dur- ing 2021 in the CoreLogic Home Price Index, the largest annual gain recorded in its 45-year his- tory, generating a big increase in home equity wealth," said Dr. Frank Nothaft, Chief Economist for CoreLogic. "For low- and moderate-income homeowners, home equity has historically been a major source of wealth." Negative equity, also referred to as underwater or upside-down mortgages, applies to borrow- ers who owe more on their mortgages than their homes are currently worth. As of Q 4 of 2021, negative equity share, the quarter-over-quarter and year- over-year changes were as follows: • Quarterly change: From the third quarter of 2021 to the fourth quarter of 2021, the total number of mortgaged homes in negative equity decreased by 3% to 1.1 million homes, or 2.1% of all mortgaged properties. • Annual change: In Q 4 of 2020, 1.5 million homes, or 2.8% of all mortgaged properties, were in negative equity. This number decreased by 24.9%, or approxi- mately 380,000 properties, by Q 4 of 2021. • Distribution of negative equity: Of loans in negative equity in Q 4 of 2021, 42% had a loan-to- value ratio below 125%, and 58% had a loan-to-value ratio of 125% or higher. Since home equity is directly affected by home price changes, borrowers with equity positions near the negative equity cutoff are most likely to move out of or into negative equity as prices change. If home prices increase by 5%, some 141,000 homes would regain equity, according to the book of mortgages for Q 4 of 2021. If home prices decline by 5%, an esti- mated 183,000 homes would fall underwater. The CoreLogic HPI Forecast projects home prices will increase approximately 5% from December 2021 to December 2022. The next CoreLogic Homeowner Equity Report will be released in June, featuring data for Q1 2022.

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