The next wave of servicing regulation is coming – Are you ready?

Join this webinar to learn what servicers need to know about recent and upcoming servicing compliance regulations and strategies experts are implementing to prepare for servicing regulatory audits.

In a purchase market, rookie LOs may struggle

Rookie LOs in 2020 could ride the refi wave and rack up a hefty monthly paycheck without Herculean effort. But these days, they'll have to sing for their supper.

Logan Mohtashami on trends in forbearance exits

In this episode of HousingWire Daily, Logan Mohtashami discusses several hot topics in the housing market, including recent trends in forbearance exits and future homebuyer demand in the midst of inventory shortages.

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With a rise in natural disasters, including wildfires, hurricanes, floods, tornadoes and mudslides. The mortgage industry needs to be proactive in examining programs to help borrowers recover.

Mortgage

The refinancing boom is just getting started

But do lenders have the capacity to handle more volume?

Even with refinancings driving a record $1.1 trillion in originations in the second quarter and testing the limits of lenders’ capacity, LOs, mortgage executives and economists say all the conditions are right for a string of even bigger quarters. 

According to a report this week by data and analytics firm Black Knight, there are over 19 million high-quality refinance candidates in America, representing 43% of all 30-year mortgage holders. (There were about 11.7 million eligible homeowners this time last year.)

Black Knight defines “high-quality” refinance candidates as those with credit scores of 720 or higher, who hold at least 20% equity in their homes, are current on their mortgage payments, and could shave at least 0.75% off their first rate lien by refinancing. 

If all 19.3 million candidates were to refinance, the average savings would amount to $299 a month, an aggregate of $5.3 billion, the data firm’s researchers found. More than 7 million could save at least $300 a month, while 2.5 million could save $500 a month or more, Black Knight said.

“Even with everything going on in the broader economy, we’re still seeing record levels of refinancings out there, simply because rates are sitting at 2.86%,” said Andy Walden, director of market research at Black Knight.

Locks on refinance loans that are expected to close in the third quarter (assuming a 45-day lock-to-close timeline) are up 20% from Q2, per Black Knight, suggesting that Q3 2020 refi volumes could eclipse the record-setting second quarter.

“With rates near historic lows, millions of consumers have an opportunity to find savings by refinancing and, in many cases, significantly lowering their interest rate and monthly payments,” said Will Pendleton, senior managing director of third party originations at Home Point Financial. “We feel that the low-rate environment is likely to persist well into 2021, and a great amount of focus in the lending community is on building capacity to meet the explosion of consumer demand.”

Several mortgage executives and LOs told HousingWire that some lenders don’t have the infrastructure to handle the existing pipeline, and could struggle to process a greater number of applications in the ensuing quarters. 

“I think it’s going to be busy well into next year, if not longer,” said Stan Middleman, the CEO of Freedom Mortgage. “The protracted level of interest rates being low would seem to indicate that it will be a while until the refis play out. One of the reasons it was only $1.1 trillion last quarter was that the industry was not built out to the appropriate capacity necessary.”

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