Ellie Mae: Refis continue to gain traction

Refinancing increased to 58% of all closed loans, fueled by mortgage rates that fell to their lowest mark since Ellie Mae began tracking this data in 2011, according to the September Ellie Mae Origination Insight Report

The return of refinances to their pre-summer percentages, the report notes, pushed purchase loans back to 42% of all closed loans in September, “a significant drop from the 50% rate in January,” but well above the May low of 35%.

Many millennials took advantage of the opportunity to refinance their mortgages in September. According to the latest Ellie Mae Millennial Tracker, refinances climbed to 43% of all closed loans, up 3% from August. Refinances accounted for 51% of conventional loans in September, the highest percentage since June, and up from 48% in August.

Older millennials locked in slightly higher interest rates, 3% on average, compared to 2.98% for younger millennials, which helped increase the share of refinance loans for both sub-groups of millennials. 

“As we move into fall and the traditionally hot summer home buying season normally tapers off, we will watch to see if purchase loan applications trend downward and refinances regain momentum. We know that homeowners are continuing to take advantage of the low rates,” said Joe Tyrrell, president, ICE Mortgage Technology. 

The 30-year note rate dropped to 2.78%, for VA loans, down from 2.86% in August, and fell to 3.01% for FHA loans, down from 3.10% the prior month. Conventional rates remained the highest overall at 3.02%, but lower than 3.12% in August.

September data also show the time to close all loans increased to 51 days, up from 49 days in August – with purchase mortgages typically closing about a week faster than refinancing loans.

Time to close for purchase loans increased to 47 days in September, up from 45 days in August – compared to 54 days to close refinances in September, up from 50 days in August.

Borrower credit quality improved. The FICO score average for all loans continued to increase to a new high for 2020, analysts wrote, rising to 753 in September, up one point from the prior month. Borrower profiles of closed first-lien mortgage loans of all types for September also feature 73 loan-to-value ratios and debt-to-income of 23/34.

“In addition, we’re seeing FICO scores rise to new 2020 highs, approximately 20 points higher than the same period in 2019, indicating that lenders are being more selective, but also that homebuyers and homeowners should understand the various loan products available to find the one that suits their profile best,” Tyrrell said.

The Origination Insight Report mines data from a sampling of approximately 80% of all mortgage applications initiated on the Encompass platform. 

Sharestates launches NPL investment & servicing ventures

Diversified real estate fintech Sharestates announced the launch of two new ventures: NPL Swap, a marketplace for non-performing loans, and Investors Loan Servicing (ILS). 

In addition to introducing the new private mortgage debt investment and servicing platforms, Sharestates’ CEO Allen Shayanfekr announced the hiring of Stephan Leccese as chief strategy and growth officer. In this role, Leccese reportedly will focus on leading efforts to identify, incubate, and accelerate strategic initiatives on behalf of Sharestates.  

NPL Swap will offer a transparent and reliable marketplace for investors and lenders to trade non-performing loans, according to the company website. Powered by a technology-based end-to-end solution, the NPL Swap platform provides a venue where investors can source investment opportunities “and lenders can broaden their options to dispose of non-performing loans.”

The ILS proprietary technology platform, which complements NPL’s services, aims to assist lenders seeking a specialized servicer for high touch, business purpose loans, after loan funding. It will leverage “key insights developed and refined over the years” by the Sharestates’ team.

The management team founded Sharestates to provide efficient ways to source, underwrite, close and ultimately offer private mortgage debt “for investment to the broader community,” Shayanfekr said in a statement. Leccese is a trusted industry leader, he continued, who “launched and scaled multiple real estate fintech companies building value for stakeholders.”

Before joining Sharestates, Leccese launched and scaled the single-family property (SFP) residential whole loan buying operations for a technology-driven investment manager, the company said, providing professionally managed portfolios of real estate loans.  

Prior to that, Leccese co-founded and scaled a technology-based direct lending and investment platform for SFP residential, business purpose or rental loans.

“I am excited about my new role and the opportunity to help Sharestates continue to expand beyond its successful direct lending business,” said Leccese.

Sharestates is a proprietary technology, real estate debt investment marketplace for individual and institutional investors – founded by Allen Shayanfekr and real estate veterans, Radni Davoodi and Raymond Y. Davoodi of the Atlantis Organization. 

NY Community Bank reports strong Q3, 95% deferral refunds

For the third quarter of 2020, New York Community Bancorp, Inc. reported net income of $115.8 million, up 17% year-over-year, driven by continued multifamily loan portfolio growth, strong asset quality and higher operating efficiency. Earnings per Share (EPS) increased to $0.23, up 21% compared to Q3 2019.   

“We had solid net income and EPS growth during the current third quarter, driven by strong loan growth and double-digit net interest margin expansion resulting in continued net interest income growth,” said Joseph R. Ficalora, president and CEO, while operating expenses remained contained.

Net interest income increased to $281.9 million, up 19% compared to Q3 2019, driven by significantly lower interest expense.

On the lending side, originations rose 31% compared to the $2.3 billion originated during Q3 2019. For the nine months ended September 30, 2020, originations totaled $9 billion, up 23% compared to a year ago.

Total loans held for investment grew $935 million on a year-to-date basis to $42.8 billion, led by continued growth in the multi-family portfolio and a rebound in specialty finance lending. During the first nine months of 2020, multi-family loans increased $942 million or 4% annualized to $32.1 billion. 

The continued growth in the multi-family portfolio is the result of increased refinancing activity, higher retention rates, “and market share gains as some bank and thrift competitors have either retrenched from this market or are no longer focused on this type of lending,” the company said, which bodes well for Q4 2020 loan growth.

“More importantly, our loan deferrals declined significantly,” said Ficalora. 

In accordance with the Coronavirus Aid, Relief, and Economic Security Act., the company implemented loan modifications, such as six-month full-payment deferrals with the ability to re-extend at the bank’s discretion.

From June 30, 2020 to October 22, the bank had $3.1 billion of loan deferrals eligible to come off of the deferral period. The approximately $3 billion, or 95% of these deferrals that returned to payment status at October 22 represented 7.3% of total loans as of this date, compared to 14.4% at June 30, 2020. 

Going forward, an additional $3.1 billion of deferrals should exit the deferral period, the majority during November, said Ficalora. “Given October’s strong payment performance, we remain confident about deferral payment trends through the remainder of the year.”

Non-performing assets also declined 13% to $54.9 million, or only 0.10% of total assets, compared to $63.2 million or 0.12% of total assets as of June 30, 2020. Total non-accrual mortgage loans were $18.4 million, down 24% compared to $24.2 million at June 30, 2020.  

The allowance for loan and lease losses increased $14 to $188.3 million at September 30, 2020, compared to Q2 2020, representing 415.22% of non-performing loans and 0.44% of total , to reflect COVID-19 and other economic uncertainties. 

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