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Articles by Mike Fratantoni
MBA economists: The overcapacity that still needs to be cut
After two record-setting years of mortgage origination volume, the mortgage industry is contracting, sharply. Based on our read of 2021 Home Mortgage Disclosure Act (HMDA) data, we estimate that total originations volume last year was $4.4 trillion. By comparison, we are forecasting total volume of about $2.3 trillion this year, and similar levels over the next two years.
Fratantoni: Why FHFA and GSEs should revisit their pricing framework
Potential homebuyers in today’s market are facing a number of challenges, including increasing mortgage rates and a sizeable supply and demand imbalance that is pushing home-price appreciation to very high levels throughout the country. MBA’s Purchase Application Payment Index (PAPI) has increased by 32% thus far this year, indicating that payments have risen much faster than personal income. Primary mortgage market rates are a function of several factors.
MBA's Mike Fratantoni on measuring mortgage competition
Mortgage industry participants may disagree a great deal on several different topics. However, I expect that you would find no argument with the following statement: Mortgage lending is a highly competitive business. While the scope of the market, which totaled roughly $4 trillion in volume each of the past two years, might suggest abundant opportunities, loan officers and companies need to stay on their toes to survive, let alone thrive in this environment.
Mike Fratantoni on MBA's 2022 mortgage market forecast
The last two years have been a wild ride. We’ve had the sharpest and yet also the shortest recession in history, record-low mortgage rates leading to record origination volumes, and record home prices as housing demand far outstripped supply. Let’s not forget the substantial fiscal and monetary policy that provided extraordinary levels of support for households, businesses, and markets here and abroad.
What's behind the sharp decline in mortgage delinquencies?
As the summer comes to an end, several issues are top of mind for everyone: the impact of the Delta variant, the debate over when the Federal Reserve will taper its asset purchases, the situation in Afghanistan, and the federal debt limit and budget debate. When it comes to housing and mortgage markets this fall, most attention is being focused on the expiration of eviction and foreclosure moratoria and the pending completion of forbearance terms for many homeowners.
What the Biden tax plans mean for the housing market
“Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” — Benjamin Franklin, in a letter to Jean-Baptiste Le Roy, 1789. Thankfully, after more than a year with innumerable challenges, it appears that the pandemic will end. From an economic perspective, the government acted boldly to support households and businesses through the crisis with monetary and fiscal stimulus.
MBA's spring forecast: a record purchase volume year
The sun is shining as I write this today and the forecast is for warmer weather. While others might think of restarting outdoor activities or working in the garden, our industry is gearing up for a strong spring housing market – and the first step in what MBA is forecasting will be a record-breaking year of purchase origination volume.
Non-QM lending is poised for growth in 2021
HousingWire recently spoke with Mike Fierman, managing partner and co-CEO of Angel Oak, about the non-QM lending outlook for 2021 and how Angel Oak’s “originate to hold” model benefits originators. HousingWire: What sets you apart from other non-QM lenders and how does that benefit originators and investors? Mike Fierman: One area that clearly differentiates Angel Oak is our vertical integration.
What comes next for housing in 2021?
As we look ahead to 2021, we remember that this year, the housing market has continued to remain a bright spot in the economy, even as other areas continue to struggle amid stay-at-home orders and economic shutdowns. COVID-19 threw the economy for a loop in 2020. In fact, this year seemed to prove anything is possible.
After 2020's IPOs, 2021 might be the year of MSR
With record origination volume stretching capacity and a fresh infusion of capital from the public markets en route, a slew of big nonbank lenders are shifting strategies and declining to sell their mortgage servicing rights, which they’d previously relied on to fund their operations. In fact, roughly $70.8 billion in MSR transferred across the secondary market during the third quarter of 2020. That is the lowest total since 2015, according to Inside Mortgage Finance.
Coleman, Menefee selected to OCC executive committee
The Office of the Comptroller of the Currency (OCC) has announced the appointment of two executives to the agency’s Executive Committee. Sydney Menefee has been selected to fill the senior deputy comptroller for Midsize and Community Bank Supervision on a permanent basis, and Greg Coleman will become the next senior deputy comptroller for Large Bank Supervision.
MBA: Forbearance rate holds, but exits are slowing
After two weeks of slight increases, the U.S. forbearance rate, measuring the share of mortgages with suspended payments, remained unchanged from the week prior at 5.54%, according to the Mortgage Bankers Association. The MBA estimates there are still 2.8 million homeowners in some form of mortgage forbearance. Fannie Mae and Freddie Mac loans in forbearance gained for the first time in 25 weeks on Dec. 1, however, they fell once again last week to 3.34% – a 2-basis-point improvement.
Fannie Mae reports first HPSI drop in three months
Following three months of increases, Fannie Mae’s Home Purchase Sentiment Index (HPSI), a composite index designed to track the housing market and consumers’ desire to sell or buy a home, fell 1.7 points in November to 80. Year-over-year, the HPSI is down 11.5 points. Senior Vice President and Chief Economist Doug Duncan points to consumers’ wariness around the COVID-19 pandemic’s impact on buying and selling as reason for the sudden decline.
a360inc acquires California-based notary services
Carrollton, Texas-based a360inc, an employee-owned legal and financial services technology and outsourcing company, acquired Express Notary Services, a national notary and signing services provider based in Irvine, California. Express Notary Services provides national notarization and signing services and is one of the larger independent service providers to the real estate and legal marketplaces.
Notarize CEO Pat Kinsel: There’s no going back to the days before RON
Like many digital solutions, remote online notarization (RON) became a key technology in 2020 as the housing industry scrambled to keep real estate transactions moving despite limited in-person interactions with customers. “Almost every business has been forced to redesign every customer interaction. It’s no longer possible for someone to safely pop in to sign something,” Notarize CEO Pat Kinsel explained in an interview.
Reducing the racial wealth gap by expanding down payment assistance
The incoming Biden administration has made improving racial equity a pillar of its domestic policy agenda, and appropriately so. There is a compelling argument that ending historic economic and racial inequity should start with housing, specifically down payment assistance.
Mr. Cooper settles $90M lawsuit over illegal foreclosures
Mr. Cooper, the nation’s largest nonbank servicer of mortgage loans, will refund customers nearly $90 million and pay a civil penalty of more than $6.5 million to settle a lawsuit claiming it violated the rights of over 115,000 customers, some of whom it had illegally foreclosed on.
Women are the primary borrower on 32% of Millennial mortgages
Within the Millennial generation, women were listed as the primary borrower on more than one-third of closed loans, according to Ellie Mae’s Millennial Tracker. Out of those 32% of closed loans where women were the primary borrower, more than 60% are single, and only 38% are married, according to the tool. On the other hand, of the loans where men are the primary borrower, just 41% are single while 58% are married.
MBA adds four members to its Residential Board of Governors
The Mortgage Bankers Association (MBA) announced the new members of its 2021 Residential Board of Governors and the Chairs of the Residential Committee. The new appointees include New American Funding Co-Founder and President Patty Arvielo, who created the company’s Latino Focus and other New American Dream initiatives aimed at improving the home lending experiences of Hispanic and Black homebuyers.
Increase in COVID cases holding back employment numbers
Economic activity curtailed by the rising COVID-19 cases moderated the decline of U.S unemployment in November as the rate fell just .1% from October to 6.8%, the Labor Department said on Friday. With nearly 400,000 people making up that .1% drop, the department estimates that 10.7 million Americans are still unemployed, according to the Household Survey Data.
iBuyer purchase volume sank 82% YoY in Q3
iBuyer purchase volumes were significantly lower during the third quarter this year than they were pre-pandemic, according to zavvie‘s inaugural Seller Preference Report. In Q3, iBuyer purchases dropped 82% year over year. Zillow, Redfin, Offerpad and Opendoor all paused respective iBuying practices in March, citing COVID-19 concerns. The report said that collectively, iBuyers have been purchasing homes at an average 95.5% of market value across all markets since then.
CoreLogic projects low mortgage rates and high prices into 2023
CoreLogic released its final three-year housing and mortgage outlook report for the year on Thursday, and if numbers hold up, the data company predicts 2021 will maintain its unprecedented sales and record low mortgage rates as the economy continues to recover. CoreLogic chief economist Frank Nothaft said in a podcast on Friday that the term “unprecedented” best describes 2020. More importantly, he said the current environment may even holdup into 2023.
Haus economist on pandemic's impact on housing market in 2021
Ralph McLaughlin Haus Chief Economist and SVP of Analytics This is the first installment of our economist Q&A series of the top housing forecasts for 2021. Every Tuesday in December in the HW+ Slack channel, HousingWire will be hosting a Q&A with a different economist to dig into their predictions for the upcoming year. To kick off the series, HousingWire Interviewed Haus Chief Economist and Senior Vice President of Analytics Ralph McLaughlin on his predictions for the year ahead.
The housing market outlook for 2021
There is no place like home. The nature of the crisis this year and headed into 2021 because of the ongoing COVID-19 pandemic has emphasized that fact. Even though we love our family members, we all need our space. Housing demand continues to remain quite strong for those fortunate enough to work in industries that are currently shielded from job loss, while also being more amenable to remote work.
A Lender's Playbook to Accelerating Closings
The global pandemic has created an urgent need for digital solutions. As you plan for 2021 and beyond, check out this eBook developed to help define options to streamline the loan process, application through post-close, and maximize loan production while delivering the digital experience your customers expect. Each section describes the pieces of the mortgage workflow and how you can streamline the process.
Housing market stays hot into fall with mortgage applications up 6.8%
Despite mortgage rates rising slightly from a previously all-time low, mortgage applications gained 6.8% last week, according to a report from the Mortgage Bankers Association. The refinance index continued its upward climb, gaining 9% last week and jumping 86% higher than the same week one year ago. Refinances also nearly reached two thirds share of mortgage activity last week, increasing to 64.3% of total applications from 62.8% the week prior.
Surviving in a post-COVID regulatory environment
March 2020 is a month the real estate industry will never forget. In a moment’s notice the “nice to have” tasks on our to-do lists became the new crises du jour. Over the course of a few days, much of the private real estate sector transitioned from office buildings to home offices. The most prepared companies had pandemic and business continuity protocols in place. Still, none of us could have imagined what would be coming our way, and how to manage post-COVID.
Where activity is strongest, where it's not and what's ahead
The housing and mortgage markets have been the rare bright spots in an otherwise fragile economy brought forth by the ongoing COVID-19 pandemic. Mortgage origination volume this year is on track to be the highest in more than 15 years, led by a strong wave of refinances. Just how busy have lenders been? 2003 was the last time refinance activity was as high as the $1.75 trillion MBA is forecasting for 2020.
Jumbo rates below conforming rates: When did this happen and why?
Working Paper August 28, 2020 Abstract This paper estimates the jumbo-conforming mortgage rate spread back to 2000. We show that jumbo rates were above conforming rates before the financial crisis – consistent with many previous studies – and that the spread widened during the crisis. However, the spread turned negative in 2013 and remained so through 2019, with jumbo rates about a quarter percentage point below conforming rates.
Is this the Trough? Unprecedented Drop in Growth, Large Job Losses, But Purchase Applications Signal a Rebound
Real Estate In-Depth | June 2020 By Mike Fratantoni and Joel Kan The extraordinary impact from COVID‐19 social distancing measures and business closings is impacting the economy and job market in unprecedented ways. While April economic data has been uniformly awful, more recent data on purchase applications indicate significant pent up demand for housing. Housing demand is strengthening as more states ease restrictions on activity and people get back to work.
Residential Department: DataDecoded: July 2019
By Mike Fratantoni, chief economist and senior vice president of research and industry technology, Mortgage Bankers Association | bio A stronger-than-expected economy should spur borrower activity After a shaky start to this year, which included a prolonged government shutdown and stock-market volatility, the U.S. economy has discovered its sea legs and is experiencing somewhat smoother sailing.
Residential Department: DataDecoded: July 2018
The economy is growing, the unemployment rate is down to its lowest level in 18 years, and job growth remains strong. With this growth comes somewhat higher rates, but the Mortgage Bankers Association (MBA) take is that the net will continue to balance out toward a growing purchase market.
Residential Department: DataDecoded: April 2018
The Mortgage Bankers Association (MBA) projects that conventional conforming rates for 30-year, fixed-rate mortgages will reach 4.8 percent by the end of 2018 and 5.3 percent by the end of 2019. Given rising wages, inflation and the boost to growth, the MBA has moved to predicting four Federal Reserve rate hikes in 2018. Home-purchase loan volume is expected to increase to $1.18 trillion, from $1.11 trillion.
Residential Department: DataDecoded: January 2018
The Mortgage Bankers Association (MBA) projects that 2018 will bring $1.2 trillion in purchase mortgage originations, a 7.3 percent increase from 2017. The biggest reason for the increase is the continually improving economy. The MBA forecasts that monthly employment growth will average 125,000 jobs per month in 2018 and that the national unemployment rate will drop below 4 percent by the end of 2018.
Residential Department: DataDecoded: October 2017
Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were put into conservatorship in 2008 as the housing market and the overall economy began to crash. Nearly a decade later, these two mortgage giants remain under the government’s control. Reform is needed to provide a more stable foundation for the mortgage market going forward. The Mortgage Bankers Association (MBA) released its recommended approach to housing-finance reform earlier this year.
Worries about the housing market are overblown
Lynn Effinger recently wrote an opinion piece here on HousingWire in which he surmised that we are in a housing bubble. He suggests that Fannie Mae and Freddie Mac (the GSEs), the Federal Housing Administration and the Federal Reserve are once again “setting the stage” for another housing crisis.
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