NEWS FLASH

Foreclosure And Eviction Moratorium Extended To Aug. 31

The Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will extend their single-family moratorium on foreclosures and evictions related to the coronavirus until at least Aug. 31, 2020. The current moratorium was set to expire on June 30. The foreclosure moratorium applies to GSEbacked, single-family mortgages only.

Also announcing the same extension was the Federal Housing Administration who extended its foreclosure and eviction moratorium through Aug. 31, 2020, for homeowners with FHA-insured single-family mortgages.

FHA’s single-family foreclosure and eviction moratorium extension applies to homeowners with FHA-insured Title II Single-Family forward and Home Equity Conversion Mortgages, and continues to direct mortgage servicers to: Halt all new foreclosure actions and suspend all foreclosure actions currently in process, excluding legally vacant or abandoned properties; and cease all evictions of persons from FHA-insured singlefamily properties, excluding actions to evict occupants of legally vacant or abandoned properties.

Home Affordability Increases Nationwide

The second-quarter 2020 U.S. Home Affordability Report from ATTOM Data Solutions found that median home prices of single-family homes and condos were more affordable than historical averages in 49% of U.S. counties, up from 31% a year ago. The report found the affordability for average wage earners by calculating the amount of income needed to make monthly house payments—including mortgage, property taxes and insurance—on a median-priced home, assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio.

Compared to historical levels, 200 of the 406 counties analyzed in the second quarter are now more affordable, up from 126 of the same group of counties in the second quarter of 2019. The gains have come as higher wages, along with cheaper mortgage costs, resulting from declining interest rates, outweigh ongoing price increases that commonly have exceeded 5% in the current quarter.

Among the 41 counties with a population of at least one million, the biggest year-over-year price gains were in Philadelphia County, Penn. (up 22%); Bronx County, N.Y. (up 13%); Mecklenburg County (Charlotte), N.C. (up 12%); Dallas County, Texas (up 11%); and Orange County (Orlando), Fla. (up 10%).

Mortgages Still Difficult For Blacks To Obtain

New research published by the Consumer Financial Protection Bureau shows Blacks are more likely to be denied mortgages compared with white borrowers. On the plus side, the numbers do show an increase in the percentage of new home loans going to Black buyers. The data is part of the bureau’s third annual series of Bureau Data Point articles describing mortgage market activity over time based on data reported under the Home Mortgage Disclosure Act.

The major reason for mortgage denial among the Black community is a reliance on debt-to-income ratios. Urban Institute research shows the ratios “are much less significant predictors of loan performance than FICO scores and that many high-DTI loans have strong FICO scores.”

The CFPB has proposed a new rule that would diminish the impact of debt-to-income ratios. It would remove the general qualified mortgage loan definition’s 43% debt-to-income limit and replace it with a price-based threshold.

Supreme Court Rules CFPB’s Structure Unconstitutional

The Supreme Court ruled that the structure of the Consumer Financial Protection Bureau, as currently constituted, is unconstitutional. In a 5-4 decision, Chief Justice John Roberts said that the bureau will continue operations. However, its director could be removed by the president at will.

“Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from presidential control,” Roberts wrote in the majority decision. “The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.”

There’s been some speculation that this ruling also affects the Federal Housing Finance Authority. Mark Calabria, its director, said in a statement via Twitter, “I respect the Supreme Court’s decision in the Seila Law case. This ruling does not directly affect the constitutionality of FHFA, including the for-cause removal provision.”

Substantial Growth In Remote Online Notarization

A survey by Qualia found many businesses made the transition to remote working conditions in the title and escrow business. It also predicts that it could be a permanent flexibility for employees in that line of work. As a result, the report shows an impressive uptick in remote online notarizations as well and predicts that they are here to stay.

RONs, as the remote online notarizations are also known, were complicated to execute due to legislative roadblocks, lenders being cautious and county recording offices not technologically equipped to accept them. With the COVID-19 pandemic’s added pressure, a rapid change occurred which forced their adaptation across the industry.

“Government-sponsored entities including Fannie Mae and Freddie Mac led the way in updating their requirements to allow for RON,” according to the Qualia report. “Qualia’s survey data between March/April 2020 and May 2020 indicates a growth in acceptance and usage of RON among title & escrow companies. Between Match/April and May, RON usage increased from 24% to 33%.”

NAR Seeks To Close Homeownership Divide

For first-time homebuyers entering a market where supply is far below demand, the National Association of Realtors presented a five-point plan designed to increase the number of Black homeowners in the U.S. and help close the gap in homeownership rates between whites and Blacks.

“Before the pandemic, America faced a housing shortage of around five to six million homes due to multiple years of underproduction of new homes,” said the Realtor association’s Chief Economist Lawrence Yun. “Now, in the middle of 2020, the housing shortage has intensified.”

As explained by Yun, the plan aims to execute the following: build more homes to increase supply; build more homes in opportunity zones; increase access to down payment assistance; strengthen a Federal Housing Authority loan program; and expand alternative credit scoring models.

Nearly 7.4 Million Homes At Risk Of Storm Surges

CoreLogic’s 2020 Storm Surge report found that nearly 7.4 million single and multifamily homes with more than $1.8 trillion in combined reconstruction cost value are at risk of storm surge and possible mandatory evacuation. With the Atlantic hurricane season officially underway, many states are still under strict social distancing guidelines–causing economic stress on housing and forcing communities to develop new logistical measures to recover from natural catastrophes.

The 2020 hurricane season begins as the economy struggles, with record high unemployment, and cities at high risk of storm surge damage also face risk of mortgage delinquencies. Miami (5.1%), New York (4.7%) and New Orleans (6%) had elevated delinquency rates in February, well above the U.S. rate (3.6%) and two months ahead of the spike in U.S. unemployment. Miami, New York and New Orleans are also near the top of the list for storm surge risk, ranking first, second and fourth, respectively, for risk to single-family homes.

Your turn

National Mortgage Professional magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of editorial@ambizmedia.com.

Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.