Posts

Commercial And Multifamily Mortgage Delinquencies Remain Low

Commercial and multifamily mortgage delinquencies remained at a low rate in the final three months of 2018, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report.


Featured Sponsors:

 


“It’s hard to imagine commercial and multifamily mortgages performing much better than they have recently,” said Jamie Woodwell, MBA’s Vice President of Research and Economics. “Future performance will be largely driven by changes in the economy and how they affect property incomes, property values and the ability of owners to refinance when their loans come due. Currently, all of those factors are favorable.”


Featured Sponsors:

 


MBA’s quarterly analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.


Featured Sponsors:

 


Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the fourth quarter were as follows:

>>Banks and thrifts (90 or more days delinquent or in non-accrual): 0.48 percent, unchanged from the third quarter of 2018;

>>Life company portfolios (60 or more days delinquent): 0.05 percent, an increase of 0.01 percentage points from the third quarter of 2018;

>>Fannie Mae (60 or more days delinquent): 0.06 percent, a decrease of 0.01 percentage points from the third quarter of 2018;

>>Freddie Mac (60 or more days delinquent): 0.01 percent, unchanged from the third quarter of 2018; and

>>CMBS (30 or more days delinquent or in REO): 2.77 percent, a decrease of 0.28 percentage points from the third quarter of 2018.

MBA’s analysis incorporates the measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.


Featured Sponsors:

 


Construction and development loans are generally not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers, or other income-producing properties.  The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties.

The Rising Role Of Independent Mortgage Banks

The Mortgage Bankers Association (MBA) released a white paper, The Rising Role of the Independent Mortgage Bank – Benefits and Policy Implications, which emphasizes the vital role Independent Mortgage Banks (IMBs) play in single-family real estate finance.


Featured Sponsors:

 


“IMBs have always served the needs of a wide variety of consumers, particularly low- and moderate-income families and first-time homebuyers. Their historic and current contribution to the mortgage market reinforces their importance to making the American dream of homeownership a reality,” said Robert D. Broeksmit, CMB, President and CEO of the Mortgage Bankers Association.


Featured Sponsors:

 


Broeksmit continued, “It is the responsibility of all stakeholders, including regulators, to protect consumers by supporting rules and regulations that support IMBs. MBA believes the recommendations put forth in this white paper will enhance market stability and strengthen the housing finance system to better serve consumers.”


Featured Sponsors:

 


In order to ensure a stable and liquid mortgage market for consumers that features robust competition among a wide variety of types of mortgage lenders, the white paper details a series of policy recommendations. They include:Ensuring that QM standards, as well as GSE and FHA/VA lending standards, remain focused on creditworthy borrowers and safe products. 


Featured Sponsors:

 


>>Enhancing IMB access to longer-term, stable sources of liquidity to supplement short-term warehouse funding.

>>Providing the government housing finance programs (FHA, VA, USDA, and Ginnie Mae) with the funding and resources needed to implement improved counterparty risk standards that are transparent and risk focused, as well as to identify and respond to emerging risks.

>>Ensuring the mortgage servicing compensation regimes of the GSEs and Ginnie Mae preserve and support a deep and liquid market for mortgage servicing rights (MSRs) for servicers of all sizes and business models.

>>Further improving the value and liquidity of Ginnie Mae MSRs by continuing to advance options discussed in the Ginnie Mae 2020 white paper, including improvements to their MSR financing agreements and allowing loan-level servicing transfers (i.e., “split pools”).

>>Standardizing the servicing requirements at the government guarantors and clarifying the nature of the liability that participation in their programs entails. 

>>Making the mortgage market more attractive to banking institutions, including by addressing punitive capital requirements on mortgage servicing assets and reducing FHA False Claims Risk.

About The Author

New Home Purchase Mortgage Applications Rise In January, But Remain Flat Year-Over-Year

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for January 2019 shows mortgage applications for new home purchases remained unchanged from a year ago. Compared to December 2018, applications increased by 43 percent. This change does not include any adjustment for typical seasonal patterns.


Featured Sponsors:

 


“After two lackluster months, new home sales surged almost 30 percent in January to the fastest pace since our survey began in 2013,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “ The healthy job market, faster wage growth, moderating price gains and lower mortgage rates,  all helped home sales recover. Additionally, builders seem to be seeing improvement in their labor shortages, as government survey data showed increases in construction hiring and openings in December.”


Featured Sponsors:

 


MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 713,000 units in January 2019, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.


Featured Sponsors:

 


The seasonally adjusted estimate for January is an increase of 29.2 percent from the December pace of 552,000 units. On an unadjusted basis, MBA estimates that there were 54,000 new home sales in January 2019, an increase of 45.9 percent from 37,000 new home sales in December.


Featured Sponsors:

 


By product type, conventional loans composed 68.7 percent of loan applications, FHA loans composed 18.6 percent, RHS/USDA loans composed 0.5 percent and VA loans composed 12.2 percent. The average loan size of new homes decreased from $334,944 in December to $334,532 in January.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

2018 Ends On A High Note With A 14% Rise In Commercial/Multifamily Borrowing

A strong final three months of the year helped commercial and multifamily mortgage originations increase by three percent in 2018, according to preliminary estimates from the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released here today at the 2019 Commercial Real Estate Finance/Multifamily Housing Convention & Expo.


Featured Sponsors:

 


“2018 ended on a strong note for commercial mortgage borrowing and lending, with fourth quarter originations 14 percent higher than a year earlier, despite the broader market volatility,” said Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research. “Investor and lender interest in multifamily and industrial properties continues to drive transaction volumes while questions about retail and office property markets have slowed activity for those property types. The market as a whole ended the year roughly flat compared to 2017, continuing a plateau we’ve seen in mortgage borrowing and lending since 2015.”

FOURTH QUARTER 2018 ORIGINATIONS UP 14 PERCENT COMPARED TO FOURTH QUARTER 2017

An increase in fourth quarter originations for healthcare, multifamily and industrial properties led the overall increase in commercial/multifamily lending volumes in the fourth quarter compared to the same quarter in 2017. The fourth quarter saw a 61 percent year-over-year increase in the dollar volume of loans for healthcare properties, a 32 percent increase for multifamily properties, a 28 percent increase for industrial properties, and a slight increase (one percent) for retail properties. Originations decreased for hotel property loans (4 percent) and office property loans (3 percent).  


Featured Sponsors:

 


Among investor types, the dollar volume of loans originated for the Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased year-over-year by 32 percent. There was a 22 percent increase for life insurance company loans and a five percent increase in commercial bank portfolio loans. The dollar volume of loans for Commercial Mortgage Backed Securities (CMBS) declined 35 percent.

FOURTH QUARTER 2018 ORIGINATIONS UP 33 PERCENT FROM THIRD QUARTER 2018

Compared to 2018’s third quarter, fourth quarter originations for health care properties jumped 155 percent. There was a 56 percent increase in originations for hotel properties, a 34 percent increase for industrial properties, a 30 percent increase for multifamily properties, a 29 percent increase for office properties, and an 11 percent increase for retail properties compared to the third quarter of 2018.


Featured Sponsors:

 


Among investor types, between the third and fourth quarter of 2018, the dollar volume of loans for commercial bank portfolios increased 46 percent, loans for the GSEs increased 32 percent, originations for CMBS increased 31 percent, and loans for life insurance companies increased by 30 percent.

PRELIMINARY 2018 ORIGINATIONS THREE PERCENT HIGHER THAN 2017

A preliminary measure of commercial and multifamily mortgage origination volumes shows that 2018 originations were three percent higher than 2017. By property type, originations for multifamily properties increased 22 percent, originations for industrial properties rose 12 percent, and originations climbed 5 percent for hotel properties. Office property originations were down 7 percent, retail properties declined 13 percent and healthcare properties decreased a 16 percent.


Featured Sponsors:

 


Among investor types, loans for the GSEs increased 16 percent between 2017 and 2018 and originations for life insurance companies increased 10 percent. Loans for commercial bank portfolios decreased 10 percent and loans for CMBS decreased 26 percent.

In late March, MBA will release its Annual Origination Summation report for 2018, with final origination figures for the year.

Tallman Johnson Joins MBA As Associate VP of Legislative Affairs

The Mortgage Bankers Association (MBA) announced today that Tallman Johnson has joined MBA as Associate Vice President of Legislative Affairs. In this role, he will be responsible for advocating on behalf of MBA’s legislative and policy priorities on Capitol Hill, with a primary focus on Republican members of the United States Senate. He began his work at MBA on February 1. 


Featured Sponsors:

 


Mr. Johnson is joining MBA from Capitol Hill where he has spent the majority of his entire professional career.


Featured Sponsors:

 


“Tallman has a strong understanding of real estate finance issues, significant experience at the committee staff level, and a sterling reputation on Capitol Hill. Our members will be well served by his knowledge and familiarity of the legislative and public policy process,” said Robert D. Broeksmit, CMB, MBA’s President and CEO.


Featured Sponsors:

 


“I have known and worked closely with Tallman for years, which is why I am so confident that his skill and proficiency with the issues impacting our industry will make him a strong member of our team,” said Bill Killmer, MBA’s Chief Lobbyist and Senior Vice President of Legislative and Political Affairs.


Featured Sponsors:

 


Among his various roles, Mr. Johnson has served as a Professional Staff Member for the House Committee on Financial Services. Prior to that, he was one of the primary policy advisors to the Chairman of that panel’s Housing Subcommittee. Additionally, he has worked as a Senior Legislative Officer in the Office of Congressional and Intergovernmental Affairs at the U.S. Department of Housing and Urban Development.

Mr. Johnson holds a Bachelor of Arts in Political Science, with a Concentration in International Affairs, from The University of the South in Sewanee, TN. 

MBA Board Of Directors Rallies To Support Opens Doors Foundation In 2018

The MBA Opens Doors Foundation (Opens Doors) has received more than $1.13 million in donations in 2018 from members and member companies of the Mortgage Bankers Association’s (MBA) Board of Directors, including a year-end $53,200 gift from MBA Chairman Christopher M. George, Founder, President and CEO of CMG Financial. That single gift represents the equivalent of one month’s mortgage or rental payment made on behalf of each of MBA’s 38 board members.  


Featured Sponsors:

 


“With total gifts from the MBA Board topping $1.13 million in 2018, more than 800 families across the country will be helped by our 38-member board,” said Robert D. Broeksmit, CMB, MBA President and CEO, and Opens Doors board member. “I could not be more proud of their commitment to this very important cause.”


Featured Sponsors:

 


The generous contributions given by corporate and individual donors have made real progress towards surpassing Opens Doors’ 2019 fundraising goal. Thanks in large part to the annual appeal made by Debra W. Still, CMB, President and CEO of Pulte Mortgage, and Chairman of the Foundation’s Board of Directors, 30 companies have pledged a contribution of $25,000 or more for 2019.  


Featured Sponsors:

 


“MBA members and the mortgage industry continue to show compassion and enthusiasm in supporting the Opens Doors mission,” said Still. “Every donation goes a long way in meeting the increasing demand for support from families across the country with critically ill children. I am beyond grateful not only for Chris’ generous donation, but for the continued kindness and generosity of the MBA Board and our donors.”


Featured Sponsors:

 


Opens Doors Foundation President Deborah Dubois has laid out an ambitious agenda for growing the number of families served through the Foundation’s Home Grant Program in 2019.

“In order for Opens Doors to grow, we need to engage in ways that show current and prospective donors just how meaningful and impactful their gifts are for vulnerable families,” said Dubois. “Every contribution toward a family’s home is one less thing to worry about when the family’s child is sick.”

Support from MBA allows the Foundation to pass on 100 percent of donations to families in need of assistance. Potential grant recipients are identified through the Foundation’s ongoing relationship with children’s hospitals in Akron, Ohio; Boston, Massachusetts; Dallas-Fort Worth, Texas; Denver, Colorado; Houston, Texas; Northern and Southern California; and Washington, D.C. 

MBA Releases Disaster Recovery Guide

The Mortgage Bankers Association (MBA) today released a new consumer-facing information brochure, Disaster Recovery: A Resource for Homeowners, available for use by all MBA members, counseling groups, government agencies, and any other group that offers assistance and advice to homeowners in the aftermath of a natural disaster.

Featured Sponsors:

 

 
“2017 was the worst year on record for economic losses, both insured and uninsured, arising from natural disasters, led by losses from hurricanes Harvey, Irma and Maria. With the 2018 hurricane season fast approaching, we wanted to support disaster preparedness and provide information necessary to help homeowners successfully recover from future disasters,” said David H. Stevens, CMB, President and CEO of MBA. “The guide outlines homeowner disaster preparedness and steps to recovery including who to communicate with about your mortgage, how to navigate the insurance process, and what forms of aid and disaster loans are generally available.”

Featured Sponsors:

 
The guide features information on how to prepare for a natural disaster before it hits, what steps to take immediately after it hits, how to begin the recovery process, and information on what recovery and rebuilding assistance is available from government agencies.

Featured Sponsors:

 
In a wide scale appeal for homeowner disaster preparedness education, MBA is encouraging its member companies to offer the guide to their customers ahead of this year’s hurricane season. MBA is also offering the disaster resource guide to the public with targeted outreach to state emergency management agencies and non-profit disaster relief organizations for distribution to borrowers. Organizations are invited to partner with the MBA in the distribution process through co-branding, sponsorship of translations, and reproduction of guides as they see fit.

About The Author

MBA, NAMMBA Partner To Promote Diversity

The Mortgage Bankers Association (MBA) and the National Association of Minority Mortgage Bankers of America (NAMMBA) announced today that the two associations will form a formal strategic partnership to advance each other’s diversity and inclusion efforts.

Featured Sponsors:

 

 
“The real estate finance industry must continue to enhance diversity and inclusion in order to retain and recruit the best workforce possible,” said David H. Stevens, CMB, President and CEO of MBA. “Our industry helps individuals and families achieve the American dream; we have to make sure that dream is available to everyone, and that our workforce reflects the customer base we serve.”

“Forging a partnership with the MBA to promote inclusion is paramount to furthering NAMMBA’s mission to provide education and professional development to women and minorities in mortgage lending,” said Tony Thompson, CMB, founder of NAMMBA. “Together, the MBA and NAMMBA can respond to the clarion call in our industry for more diversity so that we may better serve our customers no matter where they live or what they look like.”

Featured Sponsors:

 
The agreement will help the two associations collaborate on certain conferences and meetings, work together on industry advocacy and research, and promote efforts aimed at furthering diversity and inclusion, including recruitment and professional development scholarships.

In addition, MBA will offer a discount to NAMMBA members on their purchases of qualified MBA products, including many MBA Education offerings.

Featured Sponsors:

 
NAMMBA is a national trade association dedicated to the enrichment and betterment of minorities and women who work in the mortgage industry. NAMMBA’s mission is to increase the engagement of minorities and women in the Mortgage Banking Industry at the local, state and national level. For more information visit www.nammba.org.

MBA is the leading voice in the real estate finance industry. MBA is committed to increasing racial, gender, sexual orientation and ethnic diversity within the mortgage banking industry. For more information on MBA’s efforts, please visit mba.org/diversity.

About The Author

MBA President And CEO Calls For GSE Reform

David H. Stevens, CMB, President and CEO of the Mortgage Bankers Association (MBA), testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs at a hearing entitled, “Principles of Housing Finance Reform.” His full written testimony is available here. Below is Stevens’ oral testimony, as prepared for delivery:

Chairman Crapo, Ranking Member Brown, and members of the Committee, thank you for the opportunity to testify today.

Featured Sponsors:

 

 
It has been nearly nine years since the GSEs entered conservatorship, and yet their long-term status remains unresolved. The financial crisis exposed the structural conflicts and misaligned incentives in the GSE business model, as well as weaknesses in the regulatory framework that was in place at the time.

Extended conservatorship is economically and politically unsustainable and an unacceptable long-term outcome. Without comprehensive reform, borrowers, taxpayers, and lenders will all face increased risk and uncertainty about the future.

Featured Sponsors:

 
Because MBA represents over 2,300 member firms of all sizes, both single-family and commercial/multifamily, including nearly 650 small, community-based mortgage lenders, we firmly believe that housing finance reform must foster a competitive primary market that is served by a diverse cross section of lending institutions.

A year ago, MBA convened a Task Force for a Future Secondary Mortgage Market. The Task Force reflected the composition of MBA’s membership, residential and multifamily, from integrated financial institutions to the smallest community lenders. Our Task Force truly represented the full depth and breadth of the entire real estate finance industry rather than the narrow interest of any one specific market segment.

Featured Sponsors:

 
Our proposal seeks to ensure equitable access for smaller lenders to the secondary market: prohibiting special pricing and underwriting based on loan volume as occurred prior to conservatorship, preserving cash window and small pool execution options, and preventing vertical integration by the largest market participants.

I have submitted our proposal as part of my written testimony.

Our proposal recognizes the need for any comprehensive GSE reform plan to balance three major priorities: taxpayer protection, investor returns, and consumer cost and access to credit.

To achieve these policy objectives, MBA’s plan recommends recasting the GSEs’ current charters and allowing a multiple-Guarantor model that features at least two entities and preferably more.

Guarantors would be monoline, regulated utilities owned by private shareholders, operating in the single-family and multifamily markets. The core justification for utility-style regulation rests with the premise that privately-owned utilities attract patient capital and derive much of their existence and powers from the state.

The Guarantors would be subject to rigorous capital requirements that would provide financial stability without unduly raising the cost of credit for borrowers. These requirements could be satisfied through a combination of their own captial and proven means of credit risk transfer.

The implied government guarantee of Fannie Mae and Freddie Mac would be replaced with an explicit guarantee at the mortage-backed security level only. This guarantee would be supported by a federal insurance fund with appropriately-priced premiums paid by the Guarantors, much like banks pay for FDIC insurance.

Our plan explicitly calls for deeper first-loss risk sharing that is transparent, scalable to all lenders, and capable of limiting taxpayer exposure to nothing more than catastrophic risk.

The Task Force also developed recommendations in two areas that have vexed past reform efforts: the appropriate transition to a new system and the role of the secondary market in advancing a national affordable-housing strategy.

Our proposal specifically notes the importance of leveraging the assets, infrastructure, and regulatory framework of the current system wherever possible. We also believe that any workable transition must utilize a clear road map and be multi-year in nature.

We sought to develop an affordable-housing framework that appropriately focuses the scope of the federally-supported secondary market, covering both renters and homeowners of varying income levels.

Our plan suggests other improvements to better serve the full continuum of households, including updating credit-scoring models, better capturing nontraditional income, and providing enhanced liquidity for small-balance loans.

Our framework has outcomes that are transparent, well-defined, measurable and enforceable.

Only Congress can bring about the changes necessary to achieve the core principles outlined in our plan, which are necessary for a vibrant housing finance system.

FHFA has put in place a number of policies and procedures to improve access to the secondary mortgage market and reduce the risks to taxpayers. Now is the time for Congress to act to “lock in” these improvements.

After all, only Congress can alter the existing GSE charters, establish an explicit federal government guarantee, and create a regulatory mandate to maintain a level playing field.

And most importantly, only Congress can provide the legitimacy and public confidence necessary for long-term stability in both the primary and secondary mortgage markets.

We cannot go back to a housing finance system that provides private gains when markets are strong yet relies on support from taxpayers when losses occur.

Calls to simply recapitalize the GSEs and allow them to operate without further structural changes are misguided. Under such plans, the post-crisis reforms already achieved could be reversed at the discretion of future FHFA directors.

The American people rely on a housing finance system that enables them to rent a quality, affordable apartment, buy their first home, or build a nest egg to pass on to their children. We owe it to them to proceed with the hard work of reform without delay.

Thank you again for the opportunity to testify. And I want to reiterate MBA’s long-standing commitment to working with the Committee on all elements of GSE reform. I look forward to your questions.

About The Author

Kudos To The MBA

The National Association of Hispanic Real Estate Professionals (NAHREP) congratulates the Mortgage Bankers Association (MBA) and Rodrigo Lopez for his appointment as their 2017 chairman. As the first Latino in the MBA’s 100-year history to hold this prestigious position, Mr. Lopez will lead an organization which represents over 2,200 member companies throughout the real estate finance industry. Lopez has been an active member of the MBA for the last three decades and has served on numerous boards, advisory boards and committees focused on creating a positive and competitive business environment for the real estate finance industry. Sworn in on Sunday during the MBA Annual Convention and Expo opening ceremony in Boston, Lopez pledged to uphold the MBA’s mission to promote fair, responsible, and sustainable mortgage practices through both education and advocacy, for the benefit of industry professionals and the families whom they represent.

Featured Sponsors:

 

 
As the most recent chairman of MBA’s Diversity and Inclusion Committee, Lopez worked to advocate for underrepresented facets of the population in order to foster inclusiveness, creativity, and economic growth within the industry.

Featured Sponsors:

 
“Rodrigo Lopez represents the best of both our industry and the Hispanic community in the United States,” said Gary Acosta, CEO and Co-Founder of NAHREP. “NAHREP supports the MBA and Rodrigo Lopez in their efforts to improve and diversify the real estate finance industry and is committed to assisting in every way possible.”

Featured Sponsors:

 
This historic milestone comes at a pivotal time for the Latino community, as Hispanic homeownership has been growing while homeownership among the general population continues a twelve-year decline. According to NAHREP’s 2015 State of Hispanic Homeownership Report (SHHR), Hispanic families represent 52 percent of new households over the last 15 years. However, access to affordable mortgage credit remains a primary barrier to Hispanic homeownership growth. These numbers are especially important considering that Hispanics are poised to add as many as 5.7 million additional homeowners over the next decade.

About The Author