TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 63 of 83

MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 62 J O U R N A L April 2023 fees, and penalties that should have been waived. The CFPB also reported on the payday and title lending markets and illegal fees charged to consumers in that realm as well. Last year, the CFPB released a research report on free repay- ment plans offered in many states for payday loans that often go unused by borrowers. In July 2022, the CFPB filed a lawsuit against ACE Cash Express for concealing free repayment plans from its borrowers who ended up paying hundreds or thousands of dollars in unneces- sary re-borrowing fees. In this special edition of Supervisory Highlights, the CFPB reveals the ways that other short-term, high-cost payday and title loan lenders have been profiting from unlaw- ful fees. Specifically, CFPB examiners found that payday and title lenders charged: Vehicle repossession and property retrieval fees: Some borrowers were charged repossession fees, as well as fees to retrieve personal property found in repossessed ve- hicles, which sometimes included lifesaving medical equipment. The borrowers' loan agreements did not allow the lenders to charge these fees. Vehicles being repossessed with fees tacked on despite prior payment arrange- ments: Lenders that repossessed vehicles despite having entered into payment agreements with borrowers to allow them to avoid repossession. When borrowers went to reclaim their vehicles, they were forced to pay repossession fees as well as forced to refinance their debts—a practice that gen- erally adds new costs to the initial title loan principal. FORECLOSURE FILINGS UP 18% YOY F oreclosures are a given in any market conditions, but as rates rise and the cost to borrow money becomes more expensive, foreclosures are becoming a much more common occurrence. According to a new report from ATTOM Data, they reported a total of 30,528 Ameri- can properties with some sort of foreclosure filing against it, up 18% year over year. "Foreclosure activity finally started to sta- bilize in February after 21 straight months of increases," said Rob Barber, CEO at ATTOM. "The numbers don't yet show a clear trend toward fewer foreclosures, partly because February is a short month. But with histori- cally high levels of home equity flowing from a decade of rising values, we may be seeing a growing number of delinquent mortgage payers with at least the option to sell before facing foreclosure." Overall, lenders repossessed 3,831 prop- erties in February 2023, dipping 2% from January, but up 45% from last year. Foreclosure starts decreased monthly as lenders started the foreclosure process in 20,360 properties in February, down 2% but up 23% from a year ago. All this boils down to a nationwide figure of 1-in-4,574 homes with a foreclosure filing against it States with the highest foreclosure rates were New Jersey (one in every 2,271 housing units with a foreclosure filing); Maryland (one in every 2,390 housing units); Illinois (one in every 2,443 housing units); Ne- vada (one in every 2,854 housing units); and Indiana (one in every 2,956 housing units). Q4 2022 DELINQUENCY RISK HELD STEADY C onsulting and actuarial firm Milliman has released the findings of its fourth quarter 2022 Milliman Mortgage Default Index (MMDI) finding that the latest monthly estimate of the lifetime default risk of the average U.S.- backed mortgages held steady from the third quarter of 2022 at 3.53%. This number means that for mortgage loans that were originated in the fourth quarter, the expectation based on current market conditions is that 5.53% will miss more than six consecutive payments and enter delinquency (180 days or later) over the lifetime of the loan. According to Milliman, mortgage originations are at their lowest levels since 2019 along with refinance originations which are at their lowest levels since 2014. This is the fourth consecutive quarter that originations have decreased. Breaking down risk into its individual components, borrower risk decreased from 1.61% to 1.57% in the fourth quarter. Loans during that quarter had better FICO credit scores and better loan-to-values than reported in previous quarters. Economic risk inched up from 1.90% in Q3 2022 to 1.96% in Q4 2022 overall, though newer originations may face a steeper increase. "The slight uptick in economic risk from Q3 to Q4 2022 was offset by a decrease in borrower and underwriting risk, leading to the overall default risk remaining flat," said Jonathan Glowacki, a Principal at Milliman and author of the MMDI. "We also expect to see a drop in future home price growth, which is contributing to a fairly sharp increase in economic risk for newer mortgage loans."

Articles in this issue

Archives of this issue

view archives of TheMReport - FULL_MAG_MortgagePoint_April2023