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Total Tappable Equity Falls For First Time Since Housing Recovery Began

The Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based on data as of the end of October 2018. This month, Black Knight looked at full Q3 2018 data to revisit the U.S. home equity landscape, finding that quarterly declines were seen in both total equity and tappable equity, the amount available for homeowners with mortgages to borrow against before hitting a maximum 80 percent combined loan-to-value (LTV) ratio. Ben Graboske, executive vice president of Black Knight’s Data & Analytics division, explained that the decline is being driven by home prices pulling back on a quarterly basis in some of the nation’s most expensive housing markets.


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“After seeing a significant slowdown in its growth from the first to second quarters of 2018, the amount of tappable equity fell by $140 billion in Q3 2018,” said Graboske. “That is the first decline we’ve seen since the housing recovery began, and its cause can be traced directly to softening home prices in some of the nation’s most expensive – and equity- rich – markets. Indeed, tappable equity fell in 60 of the 100 largest markets, including 12 of the top 15. Three markets in California alone – San Jose, San Francisco and Los Angeles – accounted for 55 percent of the total net decline. Add Seattle into the mix, and you see that just four markets were behind two-thirds of the net reduction in tappable equity. All were areas where home price growth has far outpaced the national average in recent years, but in which prices fell in Q3 2018 – from as little as one percent in Los Angeles, to a 4.6 percent drop in San Jose.


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“Of course, there is still $9.8 trillion in total home equity in the market, some $5.9 trillion of which is tappable. That’s $571 billion more than in Q3 2017, and tappable equity remains near an all-time high. It’s also important to remember that in general third quarters are relatively flat as far as home prices are concerned, and that tappable equity is up on an annual basis in 98 percent of major metro areas. But the fact remains that affordability concerns are beginning to have an impact on home prices, particularly in more expensive markets, and as a result, on homeowner equity as well.


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Interestingly enough – although for-sale inventory is up on an annual basis for the first time in four years – an analysis of listings on mortgaged properties suggests that homeowners reluctant to put their current homes on the market due to ‘rate lock’ or ‘affordability lock’ may still be holding down available inventory by about six percent. By constraining the supply of available homes, this in turn may be countering what might otherwise be greater downward pressure on home prices.”

Other results from the quarterly equity data showed that just 1.8 percent of homeowners remain underwater, owing more on their mortgages than their homes are worth. For those with equity, the average homeowner with a mortgage has $191,000 in equity in his or her home. Among those with tappable equity, the average amount available to borrow against is $136,000. In total, over 50 million homeowners with mortgages have some amount of equity in their home, 43.6 million of which have tappable equity – a decline of approximately 272,000 from this time last year.

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How Do Underwriters View Mortgage Lending?

CoreLogic surveyed 275 underwriting professionals. What are the top workflow challenges underwriters face today? Some stats on their answers to questions like this are revealed. Highlights include:

>>96% of underwriters said accessing applicants data from one source would save them time


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>>73% said that providing borrowers with a real-time status of their loan would their job easier


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>>56% of underwriters need more than 30 days to complete one loan file


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Here’s what else the survey revealed:

Community Bank Grows Through Acquisition

Business First Bancshares, Inc. (“Business First”), the holding company for Business First Bank, has completed its acquisition of Richland State Bancorp, Inc. (“Richland State”) and its wholly owned bank subsidiary, Richland State Bank. The acquisition became effective November 30, 2018, in accordance with the terms of the previously announced agreement.


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“This merger continues our momentum toward our overall goal of becoming the region’s most influential business-focused community bank,” said Jude Melville, President and CEO of Business First. “We look forward to working with the talented and committed Richland State Bank employees to continue delivering to clients the same level of expertise and service they are accustomed to receiving from their bank, along with a broader combined product set.”


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Richland State Bank’s seven branches located across northern Louisiana will continue to operate as branches of Business First Bank. Jerome Vascocu, the former President and CEO of Richland State and Richland State Bank, will serve as director on the boards of both Business First and Business First Bank and as Chairman of Business First’s Northeast Region.


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With the completion of the acquisition, Business First has approximately $2.1 billion in assets, $1.5 billion in loans and $1.7 billion in deposits, and now serves its customers from 24 full-service banking centers.

Stephens Inc. acted as financial advisor and Fenimore, Kay, Harrison & Ford, LLP acted as legal advisor to Business First. National Capital, LLC acted as financial advisor and rendered a fairness opinion, and Kantrow, Spaht, Weaver, & Blitzer (APLC) acted as legal advisor, to Richland State.

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USF Federal Credit Union Donates $10,000

We are in the season of giving, so I want to talk about how our industry is giving back. For example, USF Federal Credit Union (USF FCU) donated $10,000 to Tampa General Hospital (TGH) Foundation to purchase three, high-tech UV lights to disinfect toys in the play area of TGH’s Children’s Medical Center.


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The lights, known as toy sterilizers, quickly kill viruses and bacteria, making the toys safe for children to play with. “The toys need to be cleaned after each child plays with them,” explained Kelly Shelor, nurse manager of the Children’s Medical Center. “The UV lights will be a great help to us.”


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She said the lights typically kill germs in about a minute, and will make it much easier for staff to make sure the toys are clean.


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“We are pleased to be able to make this donation to the hospital and are glad this will help the children stay safe,” USF FCU president and CEO Richard J. Skaggs said. “The work they’re doing at the Children’s Medical Center is vitally important and we’re happy to help with this donation.”

TGH is a Select Employee Group for the credit union and TGH employees and their families are eligible to join USF FCU.

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Equity Rich Properties Represent 25.7% Of U.S. Properties

ATTOM Data Solutions released its Q3 2018 U.S. Home Equity & Underwater Report, which shows that in the third quarter of 2018, nearly 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value — up by more than 433,000 from a year ago to a new high as far back as data is available, Q4 2013.


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The 14.5 million equity rich properties in Q3 2018 represented 25.7 percent of all properties with a mortgage, up from 24.9 percent in the previous quarter but down from 26.4 percent in Q3 2017.


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The report also shows more than 4.9 million U.S. properties were seriously underwater — where the combined estimated balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value, representing 8.8 percent of all U.S. properties with a mortgage. That 8.8 percent share of seriously underwater homes was down from 9.3 percent in the previous quarter but still up from 8.7 percent in Q3 2017.


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“As homeowners stay put longer, they continue to build more equity in their homes despite the recent slowing in rates of home price appreciation,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “West coast markets along with New York have the highest share of equity rich homeowners while markets in the Mississippi Valley and Rust Belt continue to have stubbornly high rates of seriously underwater homeowners when it comes to home equity.”

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Gateway Mortgage Group Launches New Down Payment Protection Program

Gateway Mortgage Group, a full-service mortgage company licensed in 40 states and the District of Columbia, announced the launch of an innovative program providing homebuyers with protection of their down payment in the event they sell their home under less than ideal market conditions. The new program is offered through ValueInsured and has been seamlessly integrated into most of Gateway’s mortgage loan products.


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“Gateway is always growing, innovating and seeking new ways to better support homeownership in the communities we serve around the country,” said Alan Ferree, president of Gateway. “This partnership with ValueInsured allows us to differentiate Gateway from other mortgage lenders while providing our customers with a unique option that offers some peace of mind and simply makes sense for certain markets or borrowers.”


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The new Down Payment Protection Program offers homebuyers an optional insurance feature that can minimize market risk on the value of their home and safeguard some, or all, of their down payment. If the market price drops and the home sells at a loss, up to the full amount of the down payment could be reimbursed in a turnkey, home inspection-free process usually taking 30 days or less (some restrictions apply).


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“Gateway operates in many markets where home values are at all-time highs,” said Joe Melendez, founder and CEO of ValueInsured. “Gateway continues to prove its commitment as a champion of the American dream by allowing customers to buy with confidence while helping to alleviate the concerns and unpredictability of today’s real estate values.”

Ferree added, “Our primary focus is to deliver the highest level of service to our customers through local, caring mortgage professionals across the nation. By offering this Down Payment Protection Program, we will be able to provide our customers with added flexibility, control and confidence in their journey to homeownership.”

Gateway is licensed in 40 states, and the District of Columbia, and operates more than 170 retail locations across the country. The company’s annual loan volume is forecasted to exceed $7 billion while the servicing portfolio will surpass $20 billion.

North Carolina Bankers Association Members To Gain Compliance Knowledge

OnCourse Learning Financial Services has partnered with the North Carolina Bankers Association to provide regulatory compliance training for members of NCBA. The NCBA, through its membership, plays a vital role in creating an atmosphere under which all banks in the state can thrive, prosper and continue to serve their communities. In today’s highly regulated environment, banking professionals must have expert knowledge of the latest federal regulation changes in order to stay compliant and better serve customers.


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“The partnership enables NCBA members to provide the most updated available bank training for their employees,” said Brett Shively, executive vice president, professional certification and licensure for OnCourse Learning. “Having well-trained bank employees gives bank managers the peace of mind they need to focus on offering the timely, personalized service their customers have come to expect.”


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The OnCourse Learning 2018 Course Catalog for Banking offers regulatory compliance training topics, including “Anti-Money Laundering (AML),”  “Fair Lending Overview” and “Introduction to Human Trafficking.”


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The North Carolina Bankers Association was founded in the mid 1980’s by a group of North Carolina bankers concerned with the expansion of large, national and regional banks into the state.

“With this alliance with OnCourse Learning, bank members will now have access to online courses and case studies in a wide variety of formats, including engaging videos on some of the most critical topics in the financial services industry,” said President & CEO of NCBA Peter Gwaltney.

OnCourse Learning Financial Services is a provider of governance, risk and compliance training for the bank, mortgage, credit union, gaming and nonbank financial services industries. Formerly known as BankersEdge, OnCourse Learning Financial Services educates more than 85,000 financial services professionals each year and has developed more than 1,100 financial services courses. Its parent company, OnCourse Learning, has been delivering continuing education, pre-licensing and corporate training for more than 60 years.

Mortgage Payoff Statements Becoming Gateways To Fraud

Fraud perpetrators are increasingly initiating wire fraud scams by targeting the industry practice of emailing or faxing payoff requests to title and escrow companies, according to a new white paper from CertifID.  As a result, the company is observing a breathtaking increase in the use of “spoofed” mortgage payoffs and fraudulent payoff statements to pull off wire fraud schemes.


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This disturbing trend is analyzed in Mortgage Payoffs Under Siege, a free, online white paper published by CertifID CEO/Co-Founder Thomas Cronkright, author of multiple reports on the burgeoning wire fraud trend. According to the white paper, over $1 trillion in mortgages are paid off each year; with most done so by wire. Traditional mortgage wire fraud scams usually began with a fraudster deceiving a buyer or key party to the transaction into believing that imposter was a key party to the transaction (such as the seller); then changing already established wiring instructions (with the funds then being diverted to the scammer).  Now, fraudsters are deceiving title companies by issuing counterfeit mortgage payoffs and wire instructions from the start.


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“Fraudsters now understand that it’s not that hard to ‘spoof’ or imitate an authentic payoff statement—and that statement is the ultimate authority for title or escrow companies awaiting official wire instructions,” said Cronkright.  “As a result, the agent’s guard is down and, once the fraudulent payoff statements are received by fax or email, the funds are quickly and mistakenly wired directly to the criminals.”


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Cronkright notes that this new wrinkle directly attacks the conventional best practice which marks any change to wiring instructions as a red flag. “Now, the fraudulent directions are often the first instructions the escrow or title agent even sees.”

The white paper describes five emerging examples of payoff fraud, including how the schemes work and what title and lending professionals can do to identify and prevent them.

The white paper can be downloaded at no cost at https://certifid.com/white-paper-payoff-fraud/.

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Yes, The Mortgage Industry Does Care

After the financial crisis many thought that mortgage lenders were evil. Any time I told anyone what I did for a living they would give me a dirty look. But nothing is farther from the truth. For example, an elderly widow is feeling extra thankful this holiday season, thanks in part to friends and employees of Mortgage Network, Inc., a prominent local lender.


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One of the largest independent mortgage bankers in the eastern U.S., Mortgage Network partnered with Rebuilding Together Boston and the Massachusetts Mortgage Bankers Association to rebuild the home of the local Dorchester, Massachusetts woman. The work included new kitchen cabinets and appliances, new doors, windows, landscaping, plumbing, electrical work and a rebuilt porch, roof and ceiling.


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The woman, named Bernice, is 78 and has limited mobility, had struggled to maintain her home after the death of her husband. She lives on a fixed income and had been victimized by dishonest contractors by paying for home repairs that were never completed.


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“Once we heard Miss Bernice’s story, our entire office jumped at the chance to help to bring her home back to life and put a smile back on her face,” said Brian Koss, executive vice president of Mortgage Network. “Best of all, her house has new health and safety features as well, including new railings and electrical work, so she will be able to enjoy the comfort of her home for years to come.”

It was the third straight year Mortgage Network has partnered with Rebuilding Together Boston and other local lenders to help a Dorchester homeowner with critical home repairs. Rebuilding Together Boston is just one of many community organizations Mortgage Network supports every year. Among many other events, the company sponsors or co-sponsors the Tour de Greenbelt, a bicycle ride to raise funds to protect local farmland, wildlife habitat and scenic landscapes; the HOPE International “Drive Out Poverty” golf tournament in York, Pennsylvania to help fight global poverty; and a “Polar Express” themed holiday event to raise money for local schools in Beverly, Massachusetts.

“As we approach the Thanksgiving season, all of us at Mortgage Network feel particularly honored to be able to help members of our community in need like Miss Bernice,” added Koss.

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Lenders One Touts Member And Preferred Provider Growth

The Lenders One Cooperative, a national alliance of independent mortgage bankers, has kicked off its annual Summer Conference in Minneapolis, MN. The cooperative will celebrate its continued strong growth and participate in education sessions, keynotes and networking events designed to help members discover new opportunities in a changing market.

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Already the nation’s largest mortgage cooperative, Lenders One has welcomed the addition of 13 new members, four new vendors and four new preferred investors since the beginning of the year. The cooperative most recently celebrated the addition of two notable preferred secondary providers:

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Mortgage Capital Trading, Inc. (MCT)is a capital markets-focused risk management and advisory services company providing independent analysis, training, hedging strategy and loan sale execution support to clients engaged in the secondary mortgage market. Since 2001, MCT has grown from a pipeline hedging services specialist into a fully integrated provider of capital markets services and software for lenders at every stage of growth. Lenders One members will receive discounted pricing on selected services. In addition, MCT is committed to integrating with noteXchange and working closely with Lenders One members and the cooperative’s preferred investors to bring even more efficiencies and productivity lift to the bulk trading market.

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Planet Home Lending, LLC is a full-service, multi-state lender providing its customers a wide variety of loan products, including 203(k)s and FHA manufactured home loans, with a non-QM, alternative doc program for self-employed business owners and jumbo products coming soon. Consistently ranked in the top four for price on ICON for best effort, Planet Home Lending gives Lenders One members an assigned sales and service representative delivering personalized service plus access to state-of-the-art technology and a seasoned management team.

“We are thrilled with the momentum our cooperative has achieved,” said Bryan Binder, chief executive officer of Lenders One. “As we continue to grow in size and market presence, our team is committed to delivering value to our members through our many networking and educational opportunities as well as innovative technology offerings. We can see that our progress and industry-leading services are resonating with our members as the attendance at this Summer Conference is up over 30 percent from last summer.”

Over the past three conferences, Lenders One has announced the strategic addition of new technologies to help benefit our members, including Vendorly and noteXchange. At this year’s Summer Conference, Lenders One will launch additional noteXchange capabilities as well as preview a new cutting-edge eClosing ‘in a box’ offering as well as a continued focus on digitalization to prepare mortgage bankers for the future of the industry.