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the latest Or ig i nat ion SERVICING Home Values Skyrocketing s e c on da r y m a r k e t a na ly t ic s Se r v ic i ng Analysts predict median home values are on the rise. H ome values are on track to reach more than $167,000 by the end of 2013, according to economists and real estate experts surveyed by Zillow and Pulsenomics. According to Zillow, respondents predicted median home values will rise to $167,490 by the end of this year, a gain of 6.7 percent over 2012. The forecast is a significant jump from the 5.4 percent annual increase expected in the last quarterly survey. Based on current expectations for home value appreciation over the next five years, panelists on average predicted home values could approach new record highs by the end of 2017. That said, many predicted appreciation rates will slow from 2014 through 2017. According to Zillow, survey respondents said they expect appreciation rates to slow to roughly 4.4 percent in 2014, slipping gradually each year to a rate of 3.4 percent in 2017. Cumulatively, home values are projected to rise approximately 23.7 percent during the next four years. "Short-term expectations for home value appreciation through the end of this year are consistent with a nationwide housing market recovery that is both strengthening and widening, but still coping with high levels of negative equity, high demand, and low inventory. Combined, these factors will continue putting upward pressure on home values for the next few months," said Zillow senior economist Dr. Svenja Gudell. However, Gudell continued, "the days are numbered for these kinds of market dynamics, as investors begin to pull out of some markets, mortgage interest rates rise, and more inventory becomes available." On the subject of interest rates, many respondents weren't especially concerned, even with rates posting the largest three-month gain since 2003. Among those who expressed an opinion, 88 percent said they don't think the current rate environment poses a threat to the housing market recovery; of that group, 61 percent said interest rates would have to rise to at least 6 percent to create a significant threat. "Six percent is the minimum mortgage rate threshold that the most number of panelists view as a potential show-stopper for the recovery," said Pulsenomics founder Terry Loebs. "However, nobody should dismiss the implications for the housing market of the less popular view—held by 38 percent of our experts—that we are already flirting with a reversal of fortunes at or within about 100 basis points of prevailing mortgage rate levels." "The days are numbered for these kinds of market dynamics, as investors begin to pull out of some markets, mortgage interest rates rise, and more inventory becomes available." —Dr. Svenja Gudell, Zillow 40 | The M Report Wells Fargo Leads Servicers in Volume Recent survey ranks the nation's highest performing commercial and multifamily servicers. W ells Fargo is the largest servicer of commercial and multifamily mortgages by dollar volume as of the end of June, according to the Mortgage Bankers Association (MBA). The institution is responsible for primary and master servicing duties for $431 billion in commercial and multifamily loans, according to data released Thursday by MBA. PNC Real Estate/Midland Loan Services is the secondlargest commercial/multifamily servicer, working with $352.8 billion in loans. The list of the top five commercial/multifamily lenders is rounded out by Berkadia Commercial Mortgage LLC ($235 billion); Key Bank Real Estate Capital ($165.4 billion); and GEMSA Loan Services, L.P. ($98.4 billion) as of the end of June. While Wells Fargo is the largest servicer of loans by dollar volume, PNC outranks Wells Fargo in number of loans serviced. PNC currently services 37,015 commercial/multifamily loans, while Wells Fargo services the second-largest number of loans of any servicer; 33,843 loans, according to MBA. Berkadia is not far behind with 28,993 commercial/multifamily loan servicing rights. MetLife ranks No. 10 in terms of dollar volume of commercial/multifamily loans, but it outranks all other servicers in terms of average loan size. The average loan size at MetLife is $53.2 million, compared to $12.7 million at Wells Fargo and $9.5 million at PNC. Wells Fargo and PNC are the two largest servicers of commercial mortgage-backed securities, collateralized debt obligations, and asset-backed securities both in terms of dollar volume and number of loans serviced. Wells Fargo services $348 billion loans in these categories, while PNC services $131.2 billion loans in these categories. The two banks are followed by KeyBank Real Estate Capital, Berkadia Commercial Mortgage, and GEMSA Loan Servicing in terms of dollar volume. When it comes to Fannie Mae and Freddie Mac Loans, PNC services the largest amount by dollar volume, $76.3 billion, followed by Wells Fargo with $44.3 billion. The top servicers of FHA and Ginnie Mae loans by dollar volume are PNC ($13.9 billion) and Prudential ($9.4 billion). The largest specialty servicers by dollar volume are LNR Partners, Inc., with $144.6 billion in loans and CWCapital Asset Management LLC with $141.2 billion. Wells Fargo did earn a ranking on the specialty servicer list though in the No. 6 spot with $55 billion in loans.