Freddie adds CoreLogic’s self-employed borrower solution
Global property data and analytics provider CoreLogic announced the successful implementation of its income calculation and analysis solution through Freddie Mac’s Loan Product Advisor, asset and income modeler (AIM) for self-employed borrowers.
“Adding CoreLogic as a third-party service provider to our AIM for self-employed solution gives our clients more options when looking for ways to help identify qualified self-employed borrowers,” said Kevin Kauffman, Freddie Mac vice president, business partner integration.
The digital mortgage solution is a needed tool lenders can use to calculate a self-employed borrower’s income, especially when that income extends beyond a paycheck and derives from different business structures, such as sole proprietorships, partnerships and s-corporations, the company said.
“CoreLogic’s digital mortgage solution provides us with the appropriate level of information we need to facilitate representation and warranty relief on one of the most challenging calculations in the underwriting workflow, and helps lenders reduce their costs and save time,” said Kauffman.
Calculating a self-employed borrower’s income can be tricky and labor intensive for lenders. CoreLogic’s software automates the multiple document intake process, then analyzes all income documents based on loan guidelines, and finally, automatically calculates the borrower’s income.
“CoreLogic is committed to taking time, touch and costs out of the origination process,” said Jay Kingsley, executive for Credit Solutions at CoreLogic. “We believe automation, standardization and digitization are the keys to doing so.”
This is the first of several integrations CoreLogic is planning “to help make representation and warranty relief available to Freddie Mac’s client base,” he added.
Ellie Mae: Millennials rush to refi
Millennials continue to ride the refinancing wave while interest rates remain at unprecedented lows. Refinance activity climbed to 45% of all loans closed by millennial borrowers in November 2020, according to the latest Ellie Mae Millennial Tracker, up three percentage points from October, and reaching the highest percentage since May 2020.
On a year-over-year basis, the report found that the percentage of all refinance loans closed by millennial borrowers during the month increased 14 percentage points as the average interest rate on all 30-year loans fell for the eighth consecutive month, down to 2.97%, “the lowest point since Ellie Mae began tracking the data in January 2016.”
The report divides millennials into older millennials (borrowers between 30 and 40 years old), and younger millennials (between 21 and 29 years old). The refinance share for older millennials was 52% in November, more than double the 24% refinance share of younger millennials, with both sub-groups securing average interest rates of 2.97% and 2.94%, respectively.
“Millennials have refinanced to take advantage of a significant savings opportunity they will see play out over the long-term,” said Joe Tyrrell, president, ICE Mortgage Technology. “Lenders are continuing to manage the refinance pipeline by investing in virtual solutions such as eClosing, online borrower portals, and virtual verifications, and turning this boom in loan volume into business growth.”
Fannie: Consumer confidence in housing falls
The nation’s recent COVID-19 infection surges continued to reverse consumer confidence. In December 2020, Fannie Mae’s Home Purchase Sentiment Index (HPSI) fell for the second consecutive month, to 74, down 6 points from November and 17.7 points from December 2019.
The report shows five of the six HPSI components decreased month over month, driven by “a substantially more pessimistic consumer view” of home buying and home-selling conditions.
The HPSI fell to its lowest level since May 2020 “as consumers adjusted to the worsening COVID-19 conditions of the first few weeks of December,” which was the survey collection period, said Doug Duncan, Fannie Mae SVP and chief economist, “with respondents overwhelmingly noting the unfavourability of economic conditions.”
In particular, the sell-side component fell for the first time since April 2020 — and by 18 points, at that, he explained, “reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes.” If that happens, it could perpetuate already-tight inventory levels and support additional home price growth, he added, which could lead to moderated home sales.
HPSI uses information from Fannie’s National Housing Survey(NHS), of approximately 1,000 homeowners and renters, conducted by phone mostly during the first two weeks of December. Key findings include:
- Time to buy: The percentage of respondents who said it is a good time to buy a home decreased from 57% to 52%, while the percentage of those who said it is a bad time to buy increased from 35% to 39%. The net share of those who think it is a good time to buy fell 9 percentage points, month over month.
- Time to sell: The percentage of respondents who said, it is a good time to sell a home decreased from 59% to 50% – while 42% said it is a bad time to sell, up from 33%. The net share of those who said it is a good time to sell decreased 18 percentage points, month over month.
- Home prices: The percentage of respondents who said home prices will go up in the next 12 months remained the same at 41%, while 16% expect home prices to drop, up from 13% in November.
The share of those who think home prices will stay the same decreased from 35% to 34%. As a result, the net share of Americans who said home prices will go up decreased 3 percentage points, month over month.
- Mortgage rates: The net share of Americans who said mortgage rates will go down over the next 12 months remained unchanged month over month.
- Household Income: Only 20% of respondents said their household income is significantly higher than it was 12 months ago down from 24% in November. The percentage of those who said their household income is significantly lower remained unchanged at 18%, while 61% said their household income is about the same, up from 57%.
The net share of those whose household income is significantly higher than a year ago fell four percentage points month over month.