Uncertainty is the word of the hour across all sectors of the economy and the housing market is no exception. ALTA’s recent Advocacy Summit webinar, however, delivered some positive projections from the Director of the Federal Housing Finance Agency (FHFA). 

“I believe we’ll continue to see a strong year for the mortgage industry,” FHFA Director, Mark Calabria stated during the most recent ALTA Advocacy Summit Webinar. During the virtual event, ALTA CEO, Diane Tomb, and Calabria discussed the 2020 mortgage market outlook and future demand for digital closings. 

A “jolt” toward digital, what’s ahead for eClosings?

Tomb and Calabria discussed the traction digital processes have gained during COVID-19. “Some things may go back to normal [after COVID-19],” Calabria said. “I don’t think we will see the end of in-person appraisals… however [the FHFA] will go back after the crisis to see how flexibilities like drive-by appraisals [allowable during COVID-19] performed.” 

Calabria discussed his belief that while COVID-19 has only temporarily moved certain processes to digital, the move toward eClosings is decidedly permanent. “COVID-19 jump started the e-process for mortgage closings,” he said. According to Calabria, a major hurdle for eClosings historically was title processes at the governmental level for many jurisdictions. “I think [COVID-19] will be a big jolt for local government offices,” he said. 

Overall, Calabria noted that the industry will need to answer “empirical questions” about which digital practices worked and helped streamline processes versus which digital practices increased risk. “We can’t sacrifice the quality of the loan [for the sake of digitization],” he noted, “We’ll need a strong process moving forward.” 

Mortgage market predictions for 2020

Calabria noted that there are “early positive” signs that the purchase market will come back after COVID-19 shelter-in-place orders are lifted. Calabria cited increases in purchase applications and home sales as hopeful signs. Calabria also predicted that refinance volumes will continue well into the year. “As long as rates remain at this level… I think a strong refinance market will continue for some time,” he said. 

Calabria also cited positive signs for the mortgage industry related to forbearance. At the beginning of May, nearly 4 million borrowers were in forbearance programs (meaning they will delay mortgage payments for at least 90 days). Despite the popularity of this option among distressed homeowners, Calabria noted that one-third of those in forbearance are continuing to make payments. “This gives me some comfort that we can get through this with minimal damage to the mortgage industry,” he said. 

These sentiments match the optimism Qualia has been hearing from its users:

Post-coronavirus economy, what lies ahead? 

Calabria noted that the two topline metrics he is watching closely are the labor market and the housing market prices. “Right now, unemployment rates are historically high; however, it’s moving down in the right direction,” he said. 

Calabria was hopeful that the world has made it through the worst of the outbreak; however, he noted that much of the economy and housing market strength is dependent on how and when the U.S. will get through the public health crisis and if there will be another outbreak spike. 

Moving forward, Calabria noted that the FHFA is focused on helping borrowers post-forbearance get back on their feet and ensuring the financial strength of the GSEs so that if another crisis hits, the country is prepared. “We need Fannie Mae and Freddie Mac to be financially stronger than they are today,” Calabria noted. “We need to make sure they can support the mortgage market in [future] times of stress.” 

To hear more from Tomb and Calabria about the future of the mortgage lending, click HERE to stream a recording of the webinar when it becomes available.