View profile

Vaultedge newsletter - Foreclosure moratorium ended. What now?

Vaultedge newsletter - Foreclosure moratorium ended. What now?
By Murali from Vaultedge • Issue #29 • View online
Dear Friends, Colleagues & Customers:
  • In the previous weeks, we wrote about the foreclosure moratorium imposed by the federal government coming to an end. Well, the moratorium officially ended on 31st July. So what next?
  • An estimated 1.75 million homeowners — roughly 3.5% of all homes — are in some sort of forbearance plan with their bank. By comparison, about 10 million homeowners lost their homes to foreclosure after the housing bubble burst in 2008. So the situation is not really bad.
  • It doesn’t mean that 1.75 million homeowners are at risk of losing their homes immediately. Both by federal requirements as well as in their self interest, banks will first try to restructure the loans before starting foreclosure proceedings. Given that, there would be more forced sales than foreclosures and the borrowers can walk away with their credit score intact. Plus, there still are some protections available for the borrowers.
  • However, there is one difference that the borrowers need to be aware immediately. With the federal moratorium ending, the onus of initiating the required steps to avoid foreclosure shifts back to the borrower. There are several options that borrowers still have: They can extend the forbearance if they haven’t used up the full 18 month period, they can go for a deferral or a loan modification.
  • If you are a Servicer, then in most cases it would actually make sense for you to work with the borrower to restructure the loan. You can tack the overdue payments to the end of the loan term, you can offer a lower interest rate and hence a lower monthly payment. The cost of these would almost always be less than the cost of foreclosure proceedings. So it is actually a win-win to the servicer and the borrower.
  • Along with the foreclosure moratorium, the Eviction ban which prevented landlords from evicting renters with overdue payments also ended on 31st July. But the government reversed course and issued a 60-day extension that will apply to counties with elevated Covid-19 infection rates due to the spread of the Delta variant. Good for the renters, but what about the landlords (some of who are probably behind their mortgage payments)?
  • Not surprisingly, National Apartment Association, a landlord group sued US government for rent lost under eviction moratorium. I am rooting for them.
  • JD Power published their annual customer satisfaction survey results for 2021. Guess who topped the list? The key findings: a) Bank-affiliated servicers are lagging behind non-bank services. b) The overall satisfaction increased this year, but that is largely driven by Forbearance and so isn’t expected to last much longer.
  • MBA published Mortgage Loan Compensation report for Q2, 2021. While the average commission paid to loan officers per loan originated decreased only slightly from 103 basis points to 101 basis points, the quarterly bonus compensation paid to loan processors dropped from $2,684 per processor per month in Q2 2020 to $1,999 in Q2 2021. This is not surprising because Loan processor staffing grew by 49 percent from Q2 2020 to Q2 2021. If you are a lender, this could be the biggest area for you to look at to adjust to the new reality of 2021 & 2022.
  • We interviewed some more fantastic guests for our podcast in the last few weeks. For my friends dealing in secondary/ whole loan trading, don’t miss this episode with Shawn Ansley, Managing Director, Vice Capital. He talks about how secondary markets are expected to perform in the current market conditions.
  • If you ever spoke to Lisa Springer, CEO of Stratmor Group you will not forget her. She has a very varied experience and she makes a very compelling case for every point she makes. Listen to Lisa’s take on what really matters to lenders and servicers when it comes to technology.
  • Margin compression is a theme that keeps coming in our discussions with top mortgage industry executives. We spoke to Jamie Cavanaugh, COO of Amerifund Home Loans. She is someone who saw the 2007-08 and came stronger. Jamie shared her insights on how mortgage lenders can better prepare themselves to face market uncertainties and margin compression. If margin compression is on your mind, then you can’t afford to miss this.
  • Just this morning, I came across this news that put a big smile on my face. Rushmore Loan Management services is expanding operations with a move to a much larger office in Dallas. It is great news for me for two reasons: 1. This hopefully signals a return to working from offices (I miss the office coffee and banter) and 2. They are moving to Irving, Dallas, kind of next door to where we operate from. Welcome neighbour! :)

EXPLAINER: What happens after foreclosure moratorium ends - ABC News
The federal foreclosure moratorium has ended. Struggling homeowners may still be able to keep their homes.
Landlord group sues federal government for rent lost under eviction moratorium - CBS News
J.D. Power: Mortgage Servicers See Significant Customer Satisfaction Gains
Mortgage Loan Compensation Report Shows Decline in LO Commissions, Volume - MBA Newslink
How present macro-economic conditions will impact secondary markets: Shawn Ansley, Managing Director, Vice Capital
‎What really matters to lenders & servicers, when it comes to technology: Lisa Springer, CEO of STRATMOR Group
‎CX, automation-led efficiency & other toolkits for lenders to improve market preparedness: Jamie Cavanaugh, COO of Amerifund Home Loans
Rushmore Loan Management Services is expanding operations with move to larger offices in Irving
Did you enjoy this issue?
Murali from Vaultedge

I write about the future of mortgages, real estate and automation.

In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue