The report for December 2021, however, allows us to see that, in some respects, the mortgage market has evolved significantly over the last 12 months. We hope you enjoyed last week’s edition where we talked about How Will Appraisal Technology Evolve In 2022? This week we’re bringing you:
FHA, VA News Impacting Lenders; Vendor Tools*
Hundreds of billions of servicing are being bought & sold out there. With Freddie & Fannie servicing trading at 5:1 (mid 3’s for Ginnie servicing), given current rates versus where servicing portfolios are, servicers are tapping into this source of capital instead of letting it sit on their balance sheet. Think of it as a savings account for a lender that retains servicing: with revenues dipping, the cash from a servicing sale can come in handy.
Meanwhile, lenders and loan originators are being asked, “Are you trying to win, or just trying not to lose?” Investors and lenders are sharpening their pricing pencils for purchases at the expense of refis. Webinars abound about how MLOs, and their parent lender, should go after the purchase business. It’ll be a dog fight out there, at least for new home business, much of which goes to builder’s lenders.
Recently we learned that mortgage applications for new-home purchases in December decreased 7.1% compared with December 2020, according to the latest Mortgage Bankers Association (MBA) Builder Application Survey (BAS). Compared with November, applications decreased by 5%. “Applications to buy a new home slowed in December, while the activity remained tilted to higher-priced homes,” says Joel Kan, MBA’s fabled AVP of economic and industry forecasting.
This company is setting its sights on same-day appraisal turn times*
Opteon wants to empower appraisers and keep them in the field by providing them with tech, process and data
With no end in sight to the high demand for housing, the real estate industry faces a serious problem: a dwindling pool of appraisers. HousingWire recently spoke to Chris Knight, CEO and Gabriel Hern, President of Opteon, which consists of a partnered AMC and staff appraiser firm. We discussed the current market and ways the real estate industry is addressing this industry-wide issue.
HousingWire: How is Opteon addressing the appraiser shortage?
Chris Knight: The shortage of appraisers is not going to be remedied without focusing on the larger issue—the lack of focus on recruiting and training new appraisers.
I began my career as an appraiser in Australia. Australians have a different appraisal training process compared to the apprenticeship model in the U.S. Here, even if a person wants to become an appraiser, they’re not able to unless they know an appraiser who is willing to mentor them.
So, the issue we’re facing is appraisers retiring and very few new appraisers coming into the industry. We’re addressing this directly through our Opteon University program. We match interested trainees with experienced mentors. Opteon University opens the door for those who otherwise wouldn’t be able to become appraisers.
Gabriel Hern: Opteon University was created out of necessity during the pandemic. Since early 2020, we’ve trained more than 150 cadets. But in light of the current need for appraisers, we’re beefing up our program so we can accommodate more trainees.
Origination Report Shows Dramatic Changes Over 2021*
The monthly Originations Insight Report from ICE Mortgage Technology typically shows only incremental changes in loan characteristics from month to month. The report for December 2021, however, allows us to see that, in some respects, the mortgage market has evolved significantly over the last 12 months.
The share of refinancing is the most dramatic and probably least surprising change. While those loans still dominated originations in December, at 52 percent (down 1 percentage point from November) they had accounted for 67 percent of originations in January. The decline in refinancing almost totally reflected the change in the composition of conventional loans. The refinancing share of those products dropped from 74 percent to 55 percent over the year while VA refinancing grew 4 points to 40 percent and FHA refinancing ended the year where it started, at 24 percent, which was also the year’s high.
Conventional loans accounted for 78 percent of the loans originated in December and FHA loans for 12 percent. The conventional share had declined slowly over the previous 12 months after starting the year with 84 percent of the market. FHA gained 3 percentage points compared to January. The VA share in December was 6 percent. The share of adjustable rate mortgages more than doubled during the year, rising to 5.2 percent in December from 2.3 percent at the start of the year.
Finding highly affordable leads to keep sales coming in
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