WASHINGTON, D.C. (September 21, 2020) — The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 8 basis points from 7.01% of servicers’ portfolio volume in the prior week to 6.93% as of September 13, 2020. According to MBA’s estimate, 3.5 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance dropped for the 15^th week in a row to 4.55% – a 10-basis-point improvement. Ginnie Mae loans in forbearance increased 3 basis points to 9.15%, while the forbearance share for portfolio loans and private-label securities (PLS) decreased by 19 basis points to 10.52%. The percentage of loans in forbearance for depository servicers decreased 7 basis points to 7.26%, and the percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 3 basis points to 7.18%.

“The share of loans in forbearance has dropped to its lowest level in five months, driven by a consistent decline of the GSE share in forbearance,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “However, not only the did the share of Ginnie Mae loans in forbearance increase, new requests for forbearance for these loans have increased for two consecutive weeks. While housing market data continue to show a quite strong recovery, the job market recovery appears to have slowed, and we are seeing the impact of this slowdown on FHA and VA borrowers in the Ginnie Mae portfolio.”

Key findings of MBA's Forbearance and Call Volume Survey – September 7 to September 13, 2020

• Total loans in forbearance decreased by 8 basis points relative to the prior week: from 7.01% to 6.93%.
  • By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 9.12% to 9.15%.
  • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 4.65% to 4.55%.
  • The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 10.71% to 10.52%.
• By stage, 31.65% of total loans in forbearance are in the initial forbearance plan stage, while 67.01% are in a forbearance extension. The remaining 1.34% are forbearance re-entries.
• Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.11% to 0.10%.
• Weekly servicer call center volume:
  • As a percent of servicing portfolio volume (#), calls decreased from 8.7% to 6.9%.
  • Average speed to answer increased from 3.3 minutes to 3.5 minutes.
  • Abandonment rates decreased from 7.3% to 7.0%.
  • Average call length increased from 7.7 minutes to 7.8 minutes.
• Loans in forbearance as a share of servicing portfolio volume (#) as of September 13, 2020:
  • Total: 6.93% (previous week: 7.01%)
  • IMBs: 7.26% (previous week: 7.33%)
  • Depositories: 7.18% (previous week: 7.21%)

MBA’s latest Forbearance and Call Volume Survey covers the period from September 7 through September 13, 2020, and represents 74% of the first-mortgage servicing market (37.2 million loans). To subscribe to the full report, go to www.mba.org/fbsurvey. If you are a mortgage servicer interested in participating in the survey, email This email address is being protected from spambots. You need JavaScript enabled to view it..

—Demographic demand and Fed policy keeping rates low has helped housing recover rapidly from the initial stages of the pandemic and remain immune to the ongoing economic impacts of the coronavirus for now, says Chief Economist       Mark Fleming

SANTA ANA, Calif., Sept. 21, 2020 – First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released First American’s proprietary Potential Home Sales Model for the month of August 2020.

August 2020 Potential Home Sales

• Potential existing-home sales increased to a 5.92 million seasonally adjusted annualized rate (SAAR), a 5.6 percent month-over-month increase.
• This represents a 70.8 percent increase from the market potential low point reached in February 1993.
• The market potential for existing-home sales increased 9.7 percent compared with a year ago, a gain of nearly 525,580 (SAAR) sales.
• Currently, potential existing-home sales is 875,000 million (SAAR), or 12.9 percent below the pre-recession peak of market potential, which occurred in April 2006.

Market Performance Gap

• The market for existing-home sales underperformed its potential by 4.8 percent or an estimated 282,430 (SAAR) sales.
• The market performance gap increased by an estimated 271,060 (SAAR) sales between July 2020 and August 2020.

Chief Economist Analysis: Strong Fundamentals Propel Housing Market Potential

“Since hitting a low point during the initial stages of the pandemic, the only major industry to display immunity to the economic impacts of the coronavirus is the housing market. Housing has experienced a strong V-shaped recovery and is now exceeding pre-pandemic levels,” said Mark Fleming, chief economist at First American. “This is largely because the economic distress from the pandemic has created a services-driven recession, disproportionally hurting younger, lower wage renters that are less likely to be homeowners or home buyers.

“The bifurcated economic landscape has allowed prospective home buyers who are still employed to channel increased savings towards buying a home, and to take advantage of record low mortgage rates. Weekly purchase applications have surpassed their levels from one year ago for 17 straight weeks, due to a delayed spring season and the heightened demand from low rates,” said Fleming. “In August, these tailwinds propelled housing market potential to its highest level since 2007, driven by a 5.6 percent month-over-month jump in the market potential for existing-home sales, according to our Potential Home Sales Model.”

Forces Boosting Housing Market Potential to 13-Year High:

• Credit Loosening: “According to the NFCI credit index, a composite measure of credit conditions, credit tightened dramatically in mid-April to its most conservative level since 2009 due to the increased economic uncertainty driven by impacts from the pandemic. Since then, credit availability has loosened, even reaching pre-pandemic levels in August,” said Fleming. “This credit composite takes into consideration many different credit indicators, giving a comprehensive picture of credit conditions in the U.S. When lending standards are tight, fewer people can qualify for a mortgage to buy a home. Likewise, when standards are loose, more people can qualify for a mortgage and buy a home. Credit loosening in August compared with last month increased housing market potential by 266,640 potential home sales.”
• House-Buying Power Increases 1.3%: “House-buying power, how much home one can afford to buy given household income and the prevailing mortgage rate, increased 1.3 percent month over month,” said Fleming. “The house-buying power increase was driven by the combined impact of lower mortgage rates, which were 0.08 percentage points lower in August than the previous month, and a moderate increase in month-over-month household income. The increase in house-buying power boosted market potential by approximately 28,180 potential home sales.”

• House Price Appreciation Continues: “Homeowners in areas where house prices are rising feel wealthier than those where house prices are flat or declining. As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity,” said Fleming. “In today’s housing market, fast rising demand against the limited supply of homes for sale has resulted in continued house price appreciation. Compared with last month, the growing wealth effect of rising equity caused by house price appreciation increased housing market potential by nearly 17,270 potential home sales.”
• Household Formation Growth Continued: “Household formation continued to grow in August, as millennials continued to form new households, increasing demand for housing,” said Fleming. “Rising household formation increased market potential by 24,255 potential home sales in August compared with last month.”

Forces Reducing Housing Market Potential:

• Tenure Length Continues to Rise: “Tenure length, the average length of time someone lives in their home, increased 0.5 percent in August relative to last month. The increase in tenure length had a negative impact on housing market potential, reducing it by 20,070 potential home sales compared with last month,” said Fleming. “While low mortgage rates can spur homebuying demand by reducing the monthly cost of a mortgage and increasing house-buying power, many existing owners who have refinanced into lower mortgages are less incented to move. Since roughly two-thirds of all home buyers are existing homeowners, homeowners staying put reduces the available inventory of homes for sale for home buyers.”

Is the Pace of Growth Sustainable?

“Our Potential Home Sales Model measures what we believe a healthy level of home sales should be based on the economic, demographic and housing market conditions. The market potential for home sales increased to a 13-year high this month due to strong underlying fundamentals, especially the return to pre-pandemic credit conditions,” said Fleming. “Demographic demand and Fed policy keeping rates low has helped housing recover rapidly from the initial stages of the pandemic and remain immune to the ongoing economic impacts of the coronavirus for now, but as with the virus itself, we are not sure if immunity lasts forever.”

Next Release

The next Potential Home Sales Model will be released on October 21, 2020 with September 2020 data.

About the Potential Home Sales Model

Potential home sales measures existing-homes sales, which include single-family homes, townhomes, condominiums and co-ops on a seasonally adjusted annualized rate based on the historical relationship between existing-home sales and U.S. population demographic data, homeowner tenure, house-buying power in the U.S. economy, price trends in the U.S. housing market, and conditions in the financial market. When the actual level of existing-home sales are significantly above potential home sales, the pace of turnover is not supported by market fundamentals and there is an increased likelihood of a market correction. Conversely, seasonally adjusted, annualized rates of actual existing-home sales below the level of potential existing-home sales indicate market turnover is underperforming the rate fundamentally supported by the current conditions. Actual seasonally adjusted annualized existing-home sales may exceed or fall short of the potential rate of sales for a variety of reasons, including non-traditional market conditions, policy constraints and market participant behavior. Recent potential home sale estimates are subject to revision to reflect the most up-to-date information available on the economy, housing market and financial conditions. The Potential Home Sales model is published prior to the National Association of Realtors’ Existing-Home Sales report each month.

Disclaimer

Opinions, estimates, forecasts and other views contained in this page are those of First American’s Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American’s business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2020 by First American. Information from this page may be used with proper attribution.

Delivers End-to-End Digital Capabilities and Advanced Automation From Point of Sale Through Post- Closing

JACKSONVILLE, Fla. – Sept. 17, 2020 – Black Knight, Inc. (NYSE:BKI), a leading provider of integrated software, data and analytics to the mortgage and real estate industries, today announced the launch of two new digital solutions to advance the loan application and approval process for both consumers and loan officers. The suite of user-centric, responsive web-designed solutions includes Borrower Digital and LO Digital. Borrower Digital simplifies the loan application process by leveraging Black Knight’s artificial intelligence capabilities at the point of sale and throughout the approval process, while LO Digital gives loan officers the ability to provide superior support to their customers anytime, anywhere.

“The past six months have clearly demonstrated the need to be able to work from anywhere. LO Digital now brings that ability to loan officers everywhere,” said Rich Gagliano, president of Black Knight Origination Technologies. “Combined with the intuitive functionality the Borrower Digital application brings to the customer experience, Black Knight has further transformed, streamlined and simplified the loan prequalification and application process for everyone involved.”

Borrower Digital guides the homebuyer through the prequalification, preapproval and refinance process via a simple, intuitive Q&A format, validating data and documents along the way. Its automated workflow alerts the homebuyer about immediate next steps, providing a self-guided process for the customer. AIVA, Black Knight’s artificial intelligence solution, helps the borrower upload identification and other supporting documentation, while assessing whether the appropriate documents were received. Information is routed from the consumer to the loan origination system and vice versa, with AIVA providing near-real-time feedback.

LO Digital is designed specifically for loan officers to manage the details of each application through an intuitive dashboard, allowing them to easily lead the homebuyer throughout the mortgage application process, respond to borrower questions along the way, and view the same information the borrower sees. The solution also provides a single application for loan officers to access loan products, pricing, pipeline, rate-locking, loan status and automated third-party service orders. With its tight integration to Black Knight’s Empower loan origination system (LOS), loan officers can work within the LO Digital application from any mobile device, while simultaneously updating the loan information in Empower, eliminating the need to rekey data and confirming data integrity and consistency from the beginning of the loan process. Ultimately, all information gathered in LO Digital and updated in Empower can be seamlessly transferred to the MSP servicing system at loan boarding and integrated with Black Knight’s consumer-facing Servicing Digital solution.

“Black Knight is leveraging the power of innovative and integrated technologies to not only simplify the mortgage application and approval process, but to improve upon it for both the consumer and the loan officer,” Gagliano continued. “By bringing anytime-anywhere functionality to loan officers and giving them a real-time view into the consumer’s application process, our digital originations suite can help our clients gain a competitive edge by providing extraordinary customer service and a superior mortgage experience.”