Yajnesh Rai

Lender Explains Forbearance Without Consent | Realtor Magazine

Wells Fargo is being sued in a proposed class-action lawsuit that accuses the lending giant of automatically placing some borrowers’ mortgages in forbearance without their permission. The borrowers claim that the forbearance has reflected poorly on their credit reports and prevented them from being able to obtain other financial services, such as refinances.

However, Wells Fargo told media outlets that the bank placed accounts in forbearance after those customers reached out to them and expressed financial hardship during the pandemic. The bank wanted “to ensure that every customer who needed payment relief would receive it without unnecessary delay,” Wells Fargo said in a statement.

“We sincerely apologize to any customer who received a forbearance and did not expressly request one, and [we] are actively working to assist each customer who may have been negatively affected,” Tom Goyda, spokesperson for Wells Fargo, said in the statement to Law360.

The federal government’s Coronavirus Aid, Relief, and Economic Security Act includes a provision that mortgage borrowers facing economic hardship due to the COVID-19 pandemic can ask for a temporary forbearance on their mortgage.

Pamela Delpapa, who has brought forward one of the lawsuits against the bank, says she was unable to refinance her home to get a better mortgage rate because her loan had been placed in forbearance, which she says she never asked for. “Banks may not institute it automatically,” the lawsuit against Wells Fargo states. “But that’s exactly what Wells Fargo did. As documented by the plaintiff and in consumer complaints from across the nation, Wells Fargo automatically placed borrowers in forbearance when they contacted the bank by phone or online to merely inquire about their options.”

An additional lawsuit filed on July 31 made similar claims against Wells Fargo. Last month, NBC News reported on borrowers in Chapter 13 bankruptcy who also claimed their loans were placed in forbearance without their consent.

Wells Fargo’s Goyda explained in a statement to Law360: “For a short period during the early stages of the crisis, in an attempt to ensure that all customers received the payment relief they needed in the midst of unprecedented levels of customer calls, we made a decision to provide mortgage forbearances to certain customers who had made an inquiry or expressed hardship but had not explicitly requested a payment suspension.”

Goyda says that the bank notified any customers whose loans were placed in forbearance and explained to them how they could change that status if they wanted.

Wells Fargo is one of the largest underwriters and home loan servicers in the U.S.

A Shortage of Existing Homes Drives Shoppers to New Construction | Realtor Magazine

 

As home shoppers find fewer existing homes for sale, they’re increasingly turning to new construction, The Wall Street Journalreports. New single-family home sales jumped nearly 14% in July from June and are at the highest level since December 2006, the Commerce Department reports.

“The demand feels really good right now,” Martin Connor, chief financial officer at Toll Brothers Inc., toldThe Wall Street Journal. “The longer it goes, the more comfortable we are that it’s got longer legs.”

When coronavirus lockdowns hit this spring, builders in many areas of the country were forced to halt construction. That prompted builders to put the brakes on many housing projects and plans and cut spending on land acquisitions for new projects, believing the sector was headed for a downturn.

By this summer, however, buyers started flooding new-home sites. Builder confidence now matches the highest on record from 1998, as homebuilders feel more upbeat about new-home construction’s strong rebound.

Younger millennials, those entering their early 30s, are making up a growing number of sales.

But home buyers are outnumbering supply in both the previously owned and new-home markets. Just 3.1 months of existing homes were available for sale at the end of July. The new-home market has a 4-month supply, which is still low but a greater supply than previously owned homes.

Home builders are raising prices due to demand and a recent increase in lumber prices. The median sales price of a new home sold in July was $330,600, which is up 7.2% from a year earlier.

Despite the surge in demand, homebuilders are limited in how quickly they can increase their inventories to meet demand. A shortage of skilled labor and a rise in land costs are also hampering build timelines, Ali Wolf, chief economist at Meyers Research, toldThe Wall Street Journal.

“You can’t just build 25% more houses,” Sheryl Palmer, chief executive of Taylor Morrison Home Corp., toldThe Wall Street Journal. “We just won’t be able to meet the demand overnight.”

Mortgage Applications Are 33% Higher Than a Year Ago | Realtor Magazine

The summer homebuying spree continues as buyers rush to apply for mortgages, CNBC reports. The COVID-19 pandemic and stay-at-home orders delayed the spring housing market and fueled pent-up demand that took off well into the summer, making “August the new April,” CNBC adds.

Mortgage applications to purchase a home inched up 0.4% last week compared to the previous week, and are now 33% higher than a year ago, the Mortgage Bankers Association reported Wednesday.

Low mortgage rates are adding to buyer urgency. The average contract interest rate for a 30-year fixed-rate mortgage fell to 3.11% last week, the MBA reports.

“The home purchase market remains a bright spot for the overall economy,” says Joel Kan, an MBA economist. “Mortgage rates at record lows and households looking for more space are driving this summer’s surge in demand.”

Meanwhile, applications to refinance are 34% higher than a year ago.

Offering an olive branch to refinancers, the Federal Housing Finance Agency announced Tuesday that it would delay implementation of a new loan refinance fee until Dec. 1. The fee, known as the “adverse market fee,” was originally slated to take effect in September. It will add a surcharge of 0.5% on mortgages backed by Fannie Mae and Freddie Mac that are refinanced into lower rates. That could result in up to $1,400 extra fee for homeowners refinancing an average $300,000 GSE-backed refinanced loan. The new fee does not apply to applications for home purchases. Read more.

“Extending the effective date will permit lenders to close refinance loans that are in their pipelines and honor the rate lock commitments they made to their borrowers, ensuring that economic relief in the form of record-low interest rates will continue to flow to consumers,” says MBA CEO Bob Broeksmit.

Homes Are Going Under Contract in Record Time | Realtor Magazine

Contract signings posted another big jump in July, the National Association of REALTORS® reported Thursday. This marks three consecutive months of growth as markets continue to roar back after facing initial closures from the COVID-19 outbreak this spring.

Pending home sales are now up 15.5% year over year. Each of the four major regions of the U.S. saw increases in pending home sales, both month over month and annually. And NAR Chief Economist Lawrence Yun said there are no indications that contract activity will wane anytime soon, particularly in the suburbs.

“We are witnessing a true V-shaped sales recovery as home buyers continue their strong return to the housing market,” says Yun. “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”

NAR’s Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, increased 5.9% in July over June’s numbers. The index reached a reading of 122.1 in July. (A reading of 100 on the index is equal to the level of contract activity in 2001.)

With nearly all states now at least partially reopened since the start of the COVID-19 pandemic, the housing market is facing a “robust activity from pent-up demand,” according to NAR’s index. Pending home sale increases were led in July by a 20.6% year-over-year uptick in the Northeast, followed by a 15.4% annual increase in Midwest, 14.9% annual increase in the South, and a 13.2% increase in the West.

Yun forecasts existing-home sales to reach 5.4 million this year, a 1.1% increase over 2019. By 2021, he predicts existing-home sales to reach 5.86 million, buoyed by an expanding economy and continued low interest rates. The 30-year fixed-rate mortgage is expected to remain low next year, averaging 3.2% in 2021. Yun also expects housing starts to grow, averaging 1.35 million in 2020 and increase to 1.43 million in 2021.

“Anecdotally, REALTORS® are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Yun says. “If 20 percent more homes were on the market, we would have 20 percent more sales, because demand is that high.”

 

© National Association of REALTORS®

 

 

New-Home Sales Look a Lot Like 2006’s Housing Levels | Realtor Magazine

Buyers continue to rush to the new-home market. Sales of newly built single-family homes in July surged to the highest pace since 2006, jumping 36% higher than a year ago, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported Tuesday.

The Midwest saw the largest spike in new-home sales last month, a 59% month-over-month increase in July. All four major regions of the U.S. posted annual gains in new home sales.

“Consumers are being driven by low interest rates, a growing focus on the importance of housing, and a shift in buyers seeking homes in lower density areas,” says Chuck Fowke, chairman of the National Association of Home Builders. “Despite these positive conditions, affordability challenges remain, especially as builders are dealing with building cost increases, including a dramatic rise in lumber costs in recent months.”

The NAHB reported a recent spike in softwood lumber prices that has added an average of $14,116 to the cost of a new single-family home since April 17.

The median sales price for a new home in July was $330,600, up 7% from a year ago.

“New-home sales are benefiting from a suburban shift, as prospective buyers seek out affordable markets in order to obtain more residential space,” NAHB Chief Economist Robert Dietz says. “Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34% year over year. In contrast, sales of completed, ready-to-occupy homes are down almost 24%. These measures point to continued gains for single-family construction ahead.”

Year over year, the Northeast posted a 21.7% annual increase in new-home sales in July, followed by a 20.4% yearly gain in the Midwest, an 8.7% increase in the Midwest, and a 4.8% uptick in the South.

Still, builders are keeping their inventories low. New-home inventory dropped to a four-month supply in July, the lowest since 2013. A six-month supply is considered a benchmark indicating a balanced market.

Mortgage Rates Fall Again, Average 2.91% | Realtor Magazine

© REALTOR® MAGAZINE

 

Mortgage rates remain near all-time lows, and many economists believe they will stay for the remainder of this year and well into next year.

“This year has been anything but normal and as the uncertainty lingers, mortgage rates remain” low, says Sam Khater, Freddie Mac’s chief economist. “These rates continue to incentivize potential buyers and the home buying season, which shifted from spring to summer, will likely continue into the fall.”

The Federal Reserve this week announced the adoption of a more flexible policy to achieve inflation that averages 2% over time. “This significant change can keep interest rates low for longer periods, which could translate into both long periods of cheap mortgages and a strong job market,” the National Association of REALTORS® said in a statement. “More and more home buyers and homeowners are expected to take advantage of these ultra-low rates.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 27:

• 30-year fixed-rate mortgages: averaged 2.91%, with an average 0.8 point, dropping from last week’s 2.99% average. The 30-year fixed-rate mortgage hit an all-time low of 2.88% at the beginning of this month. A year ago, 30-year rates averaged 3.58%.
• 15-year fixed-rate mortgages: averaged 2.46%, with an average 0.7 point, falling from last week’s 2.54% average. A year ago, 15-year rates averaged 3.06%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.91%, with an average 0.2 point, unchanged from last week’s average. A year ago, 5-year ARMs averaged 3.31%.

Freddie Mac reports average commitment rates along with average fees and point stop reflect the total upfront cost of obtaining the mortgage.

Behr Announces 2021 Color Forecast | Realtor Magazine

Behr Paint Co. unveiled 21 versatile colors on Monday to make up its Color Trends 2021 Palette. The colors include neutrals mixed with some lavish bolds to create “energizing, yet comforting” focal points in a home, Behr says.

“This has been a year of unpredictability and 2020 has significantly changed our relationship with home,” says Erika Woelfel, vice president of color at Behr. “When our color team began exploring a palette for the coming year, we knew it needed to be grounded in what we’ve been craving: comfort and personalization. A new, ‘elevated’ articulation of ‘comfort’ goes beyond traditional beige, gray, and green hues and embraces color in a way that can redefine and enhance any type of space inside or outside the home.”

Behr says color will play an increasing role in setting a mood for a space, creating a positive atmosphere, and providing a sense of well-being that ensures living and workspaces feel “pleasant, light, and productive.”

The 2021 Behr color palette is organized into six color themes: casual comfort, subtle focus, optimistic view, quiet haven, calm zone, and outdoor escape.

 

© Behr

 

Here’s a breakdown of each theme, according to Behr:

• Casual comfort: Light and cozy neutrals that strive to offer an updated take on the casual farmhouse look (warm-toned hues like Almond Wisp and Sierra).

• Optimistic view: An eclectic mix of bright hues that allude to a Mediterranean or ’70s “glam” vibe (Saffron Strands or Kalahari Sunset).

• Subtle focus: Soft pastels that are inspired by modern versions of art deco design (Seaside Villa and Wishful Green).

• Calm zone: Nurturing blues and greens continue to trend in creating calm, restorative spaces (Jojoba and Voyage).

• Quiet haven: Darker, evocative colors are presented as fit for traditional and maximalist decor (Royal Orchard and Broadway).

• Outdoor escape: Behr says that any of its 2021 color picks also can be used for exterior spaces and in expanding a home’s livable space outside too (Barnwood Gray or Cellini Gold),

Behr has teamed with color influencers for a social media campaign called “21 Days, 21 Colors, 21 Projects” that will share DIY projects featuring a color from the palette under the hashtag “#21DaysOfColor.”

FHFA Will Charge Extra Refi Fee Starting Dec. 1 | Realtor Magazine

The Federal Housing Finance Agency has agreed to delay the implementation of a loan refinance fee until Dec. 1, 2020. The “adverse market fee,” which was announced Aug. 13 and was previously scheduled to take effect Sept. 1, will add a 0.5% surcharge on most mortgages backed by Fannie Mae and Freddie Mac that are refinanced into lower rates.

The FHFA also announced that low-balance refinances are exempt. Homeowners refinancing mortgage loans with balances below $125,000 will not be charged the new fee. Borrowers with Home Ready and Home Possible program loans are also exempt. According to the FHFA, nearly half of those low-balance loans are held by lower-income borrowers at or below 80% of the area median income. 

The decision to delay and exempt lower-income homeowners comes on the heels of a letter sent by the National Association of REALTORS® and a coalition of housing groups, requesting that the FHFA reevaluate the fee, which could potentially amount to $1,400 in extra costs on an average $300,000 GSE-backed refinanced loan.

“Homeowners saving hundreds of dollars per month on their mortgages are reducing their debt-to-income ratio, which reduces risk to investors,” the letter states. “Furthermore, lenders report reverifying employment within 24 hours of closing, further reducing credit risk.”

Forty-one bipartisan members of Congress also signed a letter to FHFA Director Mark Calabria objecting to the fee. The fee can be paid over the life of the loan.

The FHFA says the new fee “is necessary to cover projected COVID-19 losses of at least $6 billion” at Fannie Mae and Freddie Mac. The FHFA anticipates $4 billion in loan losses due to projected forbearance defaults; $1 billion in foreclosure moratorium losses; and $1 billion in servicer compensation and other forbearance expenses.

More homeowners are rushing to refinance in recent weeks as mortgage rates dip below 3% for the first time ever. The refinance share of mortgage activity is about 65% of total applications, according to the Mortgage Bankers Association.

Fannie Mae and Freddie Mac guarantee about half of U.S. home loans.

On Aug. 24, NAR sent another letter to the FHFA requesting that it extend the GSEs’ program of purchasing eligible loans that enter forbearance after closing and funding, but prior to being purchased by Fannie Mae or Freddie Mac. The program is set to expire on Aug. 31.

“While the volume of loans that fall into this group is low, the threat of locking up lenders’ lines, in part, has resulted in lender overlays. Furthermore, this volume could rise in the fall,” NAR wrote in its Washington Report.

Inventory on the Way: New Homes Post Big Gains | Realtor Magazine

Housing is giving a boost to the economic recovery and housing inventories. Single-family and multifamily construction jumped nearly 23% last month, the Commerce Department reports. This marks the highest production rate since February.

Broken out, single-family construction jumped in July by 8.2% to a seasonally adjusted annual rate of 940,000. The multifamily sector, which encompasses apartment buildings and condos, rose 58.4% to a 556,000 pace, the Commerce Department reports.

“The market is being buoyed by historically low interest rates, a focus on the importance of housing, and a shift to the suburbs as more buyers are seeking homes in suburban communities, exurbs, and more affordable low-density markets,” says Robert Dietz, the NAHB’s chief economist.

New construction for single-family and multifamily units now nearly matches pre-pandemic activity from the first quarter. “Such growth is needed to steadily relieve the housing shortage,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “This kind of growth is also a major contributor to local economic recovery.”

However, Yun cautions that the increase in multifamily units may lead to an oversupply of apartment buildings, notably in city centers where there has been some shift in consumer preference for single-family homes in the suburbs during the pandemic.

On new-home construction, buyers may face higher prices. Builders caution that an increase in lumber prices—by more than 110% since mid-April–is adding about $14,000 to the cost of building each new single-family home.

Nevertheless, high buyer demand is still increasing the construction of single-family units, a sign Yun says is “welcome.” Housing inventory nationwide for homes for sale is down by 19% from a year ago. “There is intense buyer competition in the market as a result,” he notes. In particular, the Western region of the U.S. is seeing competition, as new-home construction is not rising as much and the inventory shortage is most pronounced.

Combined single-family and multifamily starts saw the largest jump last month in the Northeast, increasing 9.3% annually, followed by a 5.9% increase in the Midwest and a 5.2% uptick in the South. The West saw the lowest increase but still rose 1.4% annually.

Despite the recent increases in new-home construction, Yun predicts inventory shortages will remain problematic for the remainder of the year but sees an opportunity for a more balanced market with housing supply in 2021.

Housing permits, a gauge for future construction, rose 18.8% to a 1.50 million unit annual rate in July, the Commerce Department reports. Single-family permits jumped 17% while multifamily permits increased 22.5%. Housing permits were highest in the South, up 5.4%, and the Midwest was up 3.2% annually, but permits were down 6.2% in the Northeast and by 1.6% in the West.

Will Home Sales Keep Defying Expectations? | Realtor Magazine

Key takeways:

• A third of REALTORS® say they’re busier now than a year ago, but inventory is drastically lower.

• The market is on the upswing of a “V-shaped recovery,” with sales about 10% higher annually.

• Builders are ramping up construction to satisfy intensifying buyer interest—but it may not be enough.

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The housing market has been defying forecasts during the COVID-19 pandemic. Initially, home sales nose-dived for three consecutive months during state shutdowns. But by June, a “remarkable housing recovery” took hold, and real estate bounced back with a vengeance, Lawrence Yun, chief economist for the National Association of REALTORS®, said Wednesday during NAR’s virtual 2020 Leadership Summit.

One-third of REALTORS® say they’re busier this summer than they were a year ago, according to a recent NAR survey. It’s a sign that even under the weight of compounding national crises—the pandemic, skyrocketing unemployment, racial inequality, and a recession—the housing market is likely to remain strong. The market is on the upswing of a “V-shaped recovery,” Yun said, with sales about 10% higher than a year ago. Yun made other observations about how the housing market is faring.

Housing Shortages Limit Sales Recovery

Inventory is 20% lower than a year ago, but buyer interest remains high, Yun said. New-home construction could alleviate shortages, but activity has fallen under historic averages for the past decade, he added. Some areas of the country saw construction halted during the initial stages of the coronavirus pandemic.

But builders are starting to make up for that lost time. Housing starts for single-family and multifamily construction jumped nearly 23% last month, the Commerce Department reported Tuesday. With limited housing supply, “there is intense buyer competition in the market,” Yun said, noting that the Western region of the U.S. is seeing the worst inventory shortages in the nation.

The Pipeline of Buyers Is Growing

Meanwhile, mortgage applications, an early gauge of homebuying activity, are up 27% compared to a year ago, the Mortgage Bankers Association reported Wednesday. “These reflect buyers who are in the pipeline and are about to hit the market,” Yun said. Contract signings also have surpassed year-ago levels, up 6.3% in June compared to the previous year, according to NAR’s Pending Home Sales Index. Record low mortgage rates—which have dipped below 3% for the first time ever—may be a motivating factor. They could go as low as 2.89% in the next month or two, Yun said.

A Great Suburban Rush—Again?

While migration trends were toward urban centers before the pandemic, real estate thought leaders have predicted a suburban resurgence as home buyers seek more space for social distancing. Now the data is supporting that theory. Coronavirus and work-from-home flexibility is sparking the trend reversal, Yun said. More first-time home buyers and minorities have also been looking to the suburbs for affordability, he added.

 

 

 

Fueling a new wave of prospective suburbanites are remote workers, free from the bounds of a commute, who are widening their home searches, Yun said. NAR determined in recent research that the following counties are seeing the most significant growth in remote jobs:

1. Forsyth County, Ga.
2. Douglas County, Colo.
3. Los Alamos County, N.M.
4. Collin County, Texas
5. Loudon County, Va.
6. Hamilton County, Ind.
7. Williamson County, Tenn.
8. Delaware County, Ohio
9. Dallas County, Iowa
10. Wake County, N.C.

Uncertainty Looms

While jobs have climbed back somewhat from deep losses in the spring, employment remains 7.5% lower than a year ago, Yun said. Nevertheless, most homeowners and renters are keeping up with monthly payments. Eighty-eight percent of renters have been paying their rent on time compared to 90% a year ago, Yun noted. This is perhaps because, ironically, personal incomes are still rising.

Yun said the government’s massive stimulus bill, as well as extra unemployment benefits and aid in the form of small business loans, has helped Americans’ incomes remain elevated during the pandemic. However, growth in consumer spending has plummeted as more Americans opt to save. “There is a potential for pent-up spending as the economy reopens more,” Yun said.

 

 

 

Can Housing Keep Up the Pace?

Yun predicted the housing market will remain robust in the months ahead, saying home prices will grow 3% to 5% by the end of 2020. Next year, he predicted, home prices may increase 2% to 3%. Due to the spring dip, home sales likely will end the year down 2% to 4% compared to the previous year. But that’s “remarkable,” Yun said, considering the toll of the pandemic. Home sales will ramp up again next year, Yun said, increasing between 8% to 12%.