FHFA Supports Affordable Housing, The Move Towards A Purchase Market, And The Trouble With Technology

FHFA Disburses $1.09B for Affordable Housing

Today, the Director of the Federal Housing Finance Agency, Mark Calabria, authorized the release of over $1 billion for Fannie and Freddie’s affordable housing allocations. The record-breaking disbursement will seek to relieve an affordable housing market already weakened by the rise of home prices last year. Of the $1.9 billion, $711 million will be reserved for the U.S. Department of Urban Housing and Development, and $383 million will go to the Capital Magnet Fund managed by the Department of the Treasury.

Many Lenders Not Fully Utilizing Technology

According to a study by the STRATMOR Group, an increased number of mortgage lending companies invested in technology to streamline business due to COVID-19, but few are actually using the technology. The study found that the cost of technology per loan doubled in 2020, but that only half of lenders and customers are actually using their capabilities. STRATMOR Senior Partner Garth Graham attributes this disparity to the work involved in installing and configuring technological upgrades. Joey McDuffee, VP of Sales and Marketing for Blue Sage, says that many companies are adopting technology but not looking for ways that it can automate and improve workflow, and thus don’t see the true value in the technology. Octane technology has been a part of Cardinal's standard operating procedure for years and shown countless benefits, which should serve as a model for other mortgage companies looking to integrate more technology into their workflows.

First American Home Sales Model Forecasts Strong Housing Market

Even though a housing scarcity and a recent uptick in mortgage rates seems bad for the housing market, a number of factors might indicate the opposite. According to First American’s Deputy Chief Economist, Odea Kushi, the rollout of COVID vaccinations and an increase in equity will likely encourage older homeowners to sell, improving a currently scarce volume of homes on the market. While mortgage rates recently climbed, they are forecasted to remain around 3% for the rest of the year, which will likely be enough to maintain millennials’ interest in purchasing new homes. According to the model, with more homes on the market and financially stable millennials still interested in buying, the housing market should remain or become stronger throughout the year.

How to Boost Purchase Loan Production

While the First American sales model looks great, most mortgage professionals are expecting a sharp decline in refinances this year. The MBA predicts a 45% in refinance applications this year. Luckily, Stuart Blend from Planet Home Lending LLC had some great recommendations for less-common loans that could boast originations. Non-QM loans have become more popular lately, but in general, learning more about loans that aren’t offered by the competition is a great way to corner the market. With more people working from home, renovation loans are also in higher demand than usual, and there’s also a marked increase in one-time close loans. Familiarizing yourself with these loan products could give you an edge now that interest rates are set to climb.

Stock Market Off to Unpredictable Start in March

Economists and traders were elated to the strong start of the S&P 500 on Monday, but were hit hard by a slight dip in the market today. 2% gains were followed by a .6% slide, with tech and real estate sectors experiencing the sharpest declines. There has been intense scrutiny of the 10-year Treasury yield lately, which also experienced a 1.41% decline to the dismay of investors. People are still looking forward to the positive effects of government stimulus on the horizon, but now that optimism carries with it a fear of inflation that goes along with a volatile market.

(1) Housing Wire (2) MBA NewsLink & Scotsman Guide (3) Mortgage Professionals America (4) Scotsman Guide (5) CNBC