Vaultedge newsletter - Findings from the largest survey of borrowers

August 21, 2021

Dear Friends, Colleagues & Customers:

  • "You have the watches. We have the time." By now, every one has heard this quote attributed to some Taliban fighter. As the world watched the rapidly unfolding events in Afghanistan, this quotes summarises Taliban's strategy. Clearly, they were in it for the long term. In that context, US government committed two blunders: One, they did not negotiate from a position of strength. We had 140,000 soldiers at one point. That would be the time to negotiate; not after the numbers were drawn down. Two, even as the government negotiated with the Taliban, they announced a date for with drawl of troops. So Taliban just had to drag their feet, which I think is what they did. Hope we will learn something from this. At the same time, I am confident that US government will be able to bring every American back home safely. US has the might and the will to do that.

  • Closer home, CFPB published Pandemic Response report based on data reported by 16 Servicers. The Servicers provided loan portfolio data for nearly 17 million loans, including approximately 13 million (77%) federally backed loans and 3.5 million (23%) private loans. The results make for interesting reading. If you are a Servicer, then this should be your weekend reading.

  • Some key charts:

  • On the Originations side, CFPB and FHFA published updated loan-level data for public use collected through the National Survey of Mortgage Originations (NSMO). The data provide insights into borrowers' experiences obtaining residential mortgages. While the data is for pre-Covid period (loans originated from 2013 through 2019), it is still a very relevant source to understand borrowers' experience. The questionnaire had about 100 questions and there are about 40,000 respondents. You can't get another source like this to understand what borrowers are thinking and feeling. You can download the raw data from here. We are working on a report summarising the key findings. If you would like to have a copy of the report, just reply to this email saying - yes. You will have the report in your inbox in a few weeks.

Some highlights from the survey:

  • About half the respondents applying for a purchase loan are concerned about qualifying for a mortgage during the application process.

  • 44% of respondents said that paperless online mortgage process is important.

  • The percent of respondents who applied for a mortgage through a mortgage broker for purchase loan increased from 40% in 2018 to 46% in 2019. On the other hand, the percent of survey respondents who applied directly through a bank or credit union decreased from 54% to 49% in the same period.

In other news:

  • CoreLogic reported that annual home price gains reached a 40 year high in June 2021.

  • Mortgage forbearance plan starts reach highest level in 4 months in July.

  • CDC issued a new order temporarily halting residential evictions through October 3 in U.S. counties with “heightened levels of community [COVID-19] transmission.”

  • We sat down with Max Slyusarchuk, CEO of A&D Mortgage for an episode of Mortgage Vault podcast. A&D Mortgage is a leader in non-QM lending space. Max talks about the importance of having in-house technology capabilities to develop custom automation tools for a swifter lending process. For example - AD Mortgage has built an automated underwriting system, ground up. This has helped them achieve the fastest turnaround time for non-QM loans in the industry, that is, less than 48 hours.

  • We also spoke to Phil Shoemaker, President of Originations at Home Point Financial. Phil has decades of experience in the mortgage industry building teams and growing businesses at Home Point and Caliber Home Loans. He talked about the key head-winds and tail-winds for wholesale lenders in the current market conditions. He specifically explains how to strike a balance between building the right technology suite in house while keeping the mortgage experience as high touch as needed. This is a must listen for anyone concerned about not compromising borrower experience in the effort to automate things.

I guess that should fill your weekend :)

Have fun!

Metrics reported include call center data; forbearance requests, denials, and exits; delinquency; and borrower profiles.

The Consumer Financial Protection Bureau (CFPB) and the Federal Housing Finance Agency (FHFA) today published updated loan-level data for public use collected through the National Survey of Mortgage Originations (NSMO). The data provide insights into borrowers' experiences obtaining residential mortgages.

Home price gains reached the highest annual growth since 1979, according to the CoreLogic Home Price Index and HPI Forecast for June 2021. While affordability challenges intensify, low mortgage rates...

The gulf between buyer demand and the amount of listings for sale drove housing values to a six-decade peak, according to CoreLogic.

However, 8% fewer borrowers are still in a plan compared with a month ago, Black Knight said.

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‎Max talks about the importance of having in-house technology capabilities to develop custom automation tools for a swifter lending process. For example - AD Mortg…

‎Phil has over decades of experience in the mortgage industry and prior to Home Point, he served as the COO of Production at Caliber Home Loans. Phil helped us understand the key head-winds…