Monthly Archives: July 2016

Financial crisis ready to reenter housing

The time frame for borrowers who were significantly hit after the financial crisis to improve their credit score is about to happen, opening the door for a lot of consumers to reenter the housing market.

According to Experian’s latest analysis, foreclosures, short sales and bankruptcies remain on a credit report for seven years, which means these items are due to fall off the credit files of 2.5 million consumers between June 2016 and June 2017.

And even better for the housing market, the analysis shows that 68% of these consumers are scoring in the near-prime or higher credit segments, meaning the opportunity for this group to qualify for mortgage loans is growing.

The new Experian study looks at these potential borrowers and analyzes the consumers who foreclosed or short-sold between 2007 and 2010 and have since opened a new mortgage.

The study refers to these consumers as “boomerang borrowers” and shows that they have responsible credit behaviors and improving credit scores.

“With millions of borrowers potentially coming back into the housing market, the trends that we’re seeing are promising for both the mortgage seeker and the lender,” said Michele Raneri, vice president of analytics and new business development at Experian.

“In the coming years, boomerang borrowers will be a critical segment of the real-estate market,” said Raneri. “While many of these borrowers have gone through a very difficult time, it is encouraging to see them taking control of their finances with better credit scores and all-around better credit management.”

The study also found that the people in the short-sale category are rebounding at a higher rate than those who foreclosed, and are making their payments on time.

Using the program, agents can feature a specific listing or automatically highlight new listings or recently sold homes. Plus the program allows agents to target potential homebuyers in a specific area.

“Premier Agent Direct helps agents more efficiently work their farm area and either extend or eliminate the need for a direct mail campaign by using precision targeting to connect with local home shoppers and sellers on a medium they are using every day,” Zillow said.

According to Zillow, the Premier Agent Direct program is now available on mobile and desktop.

 “We have worked incredibly hard this year to create new opportunities for agents to connect with buyers and sellers so they can scale their businesses with greater ease – the new products are the results of those efforts,” Greg Schwartz, Zillow Group’s chief business officer, said.

“Through this new publishing platform, we have created a way to significantly increase the agent’s reach to consumers who are in a transaction mindset,” Schwartz added. “With precision targeting, we know these people are using Zillow and Trulia, and now there’s a new opportunity to connect with them on Facebook.”

 

Reveal details of HAMP replacement

The Home Affordable Modification Program will expire at the end of this year, and experts from the industry talked about its replacement: One Mod: Principles for Post-HAMP Loan Modification at the Mortgage Bankers Association annual conference this week.

The MBA revealed its new program proposal at the end of September. While the Federal Housing Finance Agency already created a new program to replace the Home Affordable Refinance Program, nothing is in place to take over for HAMP.

“One Mod is a universal framework designed to provide the customer meaningful payment relief early in delinquency,” JPMorgan Chase Product Executive Erik Schmitt told HousingWire. “This is achieved through the creation of a simplified customer experience and a product designed to provide meaningful payment relief, which is the key driver of re-performance.”

“Additionally, the product is durable, in that it is designed to provide customers with assistance across a broad range of economic environments,” Schmitt said.

One Mod will be an improvement from HAMP as experts analyze what worked and what didn’t.

“We’re taking the lessons that we learned from HAMP and finding ways to only require the specific documentation used to drive payment reduction,” Alex McGillis of Quicken Loanstold HousingWire. “The data from HAMP shows that payment reduction is the biggest driver in reducing re-defaults.”

There will be several changes to the new program as the industry shifts towards what Yvette Gilmore, Freddie Mac vice president of servicing performance management, calls a non-crisis program.

One of the major shifts includes an increase in the program’s availability.

“The focus of One Mod is to maximize the number of homes saved, which is achieved through increasing program accessibility and providing more sustainable solutions to prevent default,” Schmitt said.

Also, the proposed program will differ when it comes to the regulation that controls it. At the session, the MBA asked Laurie Maggiano, the Consumer Financial Protection Bureauprogram manager, what the industry can expect when it comes to new regulation for loan modification.

“We just published a 900-page rule, what else do you want?” Maggiano joked. Then, on a more serious note, she added, “Because the rule doesn’t say what a modification should look like, and I don’t expect to go there, I don’t expect any more regulation.”

McGillis summed up the goals for the new program:

“Everyone should have the ability or chance to save their home no matter what they’re going through,” he said at the session.

Millennials are about to take over

Millennials haven’t taken over the housing market yet, but it’s only a matter of time before they do.

Many Millennials have not moved into homeownership due to a number of factors, including a preference for urban living and a high student debt burden.

However, now first First American created a chart that shows Millennials have a higher percentage of people with a college degree than any other generation.

This educational advantage bodes well for future homeownership rates among this generation. A study from Fannie Mae showed that the long-term benefit of a college degree outweighs the short-term burden of student loan debt when it comes to the likelihood of eventual homeownership.

The study showed that those who earned a degree without taking on student debt are the most likely to become homeowners, followed by those who graduated with debt, those who never went to college and lastly, those who took on student debt but never graduated.

So Millennials’ status as not only the largest demographic but also the most educatedgeneration ever could soon lead to abnormally high homeownership rates. That could come with a downside, however.

“The risk will be that prices will adjust to all of the demand and reduce affordability, making it more difficult,” First American Financial Corp. Chief Economist Mark Fleming told HousingWire.

“That’s why the issue of lack of inventory, whether in the form of less existing home sales than expected or a lack of right-priced new homes, is so important to the future success of the market to serve the possible tsunami of demand,” Fleming said.

Freddie Mac also thinks an influx in Millennial buyers is likely, and there is evidence this could already be starting. Existing home sales increased in September, driven mainly by a dramatic increase in first-time homebuyers, which reached the highest share of homebuyers in four years, according to a report from the National Association of Realtors.