Fannie: Housing highly supports economic growth

Regardless of diminished unemployment benefits and expiring federal relief programs, a record high mortgage origination volume and strength in consumer spending will support the economy, according to Fannie Mae’s Economic and Strategic Research (ESR) Group.

Housing is playing a very important role in the country’s economic recovery, thanks to a jump in the pace of existing home sales in July to levels not seen since 2006, followed by strong pending sales, purchase mortgage applications, and construction data, the latest commentary from the ESR Group notes. 

These developments led the ESR Group to upgrade its full-year 2020 forecasts for new and existing home sales, and boost in refinance demand, to total mortgage originations of up to $3.87 trillion. This projection is “the highest nominal dollar annual total in the series’ 32-year history,” analysts wrote.

As expected the pace of economic recovery is slowing, nonetheless “housing remains highly supportive,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The Federal Reserve has made clear that it has no intention of raising interest rates in the near future, and, as mortgage spreads continue compressing, households are seizing the opportunity to refinance their existing mortgages.”

While historically low interest rates are also an inducement to buy homes, Duncan explained, “slow supply growth continues to result in high levels of home price appreciation, which is offsetting some of the affordability benefits of the lower rate environment.”

Potential risks to the economy include delays or disappointment in the development and deployment of a vaccine, which could result in a reduced rate of growth. 

“The most important factor in our expectations for U.S. economic performance remains the impact of COVID-19 on household, business, and policymaker actions,” Duncan said. “Optimism regarding a potential vaccine and declining infection and mortality rates are all supportive of stronger growth.”

Truist’s inaugural CSR report 

Truist Financial Corporation, the nation’s sixth largest commercial bank created through the merger of BB&T and SunTrust in December 2019, has released its first Corporate Social Responsibility (CSR) Report. It affirms the megabank’s near and long-term goals about economic development, pandemic relief, diversity and racial equity, environmental, social and governance (ESG) impact. 

Truist is committed to “inspiring and building better lives and communities,” said Kelly S. King, Truist chairman and CEO. “A complementary culture and common purpose united our teammates from the beginning and empowers us to strengthen our community investments; commitment to advancing diversity, equity and inclusion; and focus on being good stewards of the environment to deliver on our purpose, mission and values.”

The inaugural CSR report includes work accomplished at BB&T and SunTrust in 2019, in addition to Truist’s actions in 2020 “in the face of a global pandemic and social injustice,” and highlights specific milestones alongside structural and institutional changes since the merger.

Responding to the pandemic – Truist launched the Truist Cares initiative to support its clients, communities and teammates through a cooperative effort between Truist Financial Corporation, Truist Foundation, Inc., and Truist Charitable Fund. The initiative committed $150 million to disaster relief and assistance during the COVID-19 crisis, “in addition to substantial payment relief and other assistance to clients,” according to a statement.

It includes $50 million in relief efforts to help rebuild underserved communities through small business support and connective technology, and nearly $100 million in special COVID-19 support for teammates, including bonuses, childcare, enhanced onsite pay, and steps to enhance wellness and family support, the company said.

Leading with diversity – Currently 45% of Truist’s board of directors is racially, ethnically or gender diverse, with women holding key board leadership positions, chairing three of the board’s six committees.

Leading by example Truist’sCEO Kelly S. King signed the CEO Action for Diversity & Inclusion pledge to underscore the company’s focus on diversity, equity and inclusion, the report notes. Truist recognizes that collective action from the business community can support diversity and inclusion as a way to promote creativity, innovation, and quality decisions that enhance economic growth, the report notes.

Truist committed to increase the number of racially and ethnically diverse employees among senior leadership positions from approximately 12% (as of June 20, 2020), to at least 15% in next three years, and to ensure “regular, ongoing pay equity reviews for teammates.” 

Using community-lending power – Among others, the companycommitted to lend or invest $60 billion to low- and moderate-income (LMI) borrowers and in LMI communities from 2020 to 2022. The report further outlines the bank’s community investment goals for LMI areas, rural areas and minority communities.

“We are particularly focused on looking inward and doing our part to advance equity and economic empowerment through greater visibility and accountability,” said Ellen M. Fitzsimmons, Truist chief legal officer and head of enterprise diversity. “As a newly merged company, 2020 gave us the opportunity to live our purpose and commitments to ESG loudly, as well as continue to evolve our formal ESG programs and full reporting mechanisms.” 

Prioritizing the planet – Truist has “helped address the issue of climate change and the transition to a lower-carbon economy,” by investing in renewable energy, business operations and teammate efforts, according to the report. The company also is focusing on building near-term efforts to better measure its environmental impact, and to establish Truist’s baseline for direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions.

Visio completes 1st SFR securitization since pandemic

After an almost complete stop earlier this year, the non-qualified mortgage origination and securitizations are picking up. Especially single-family rental (SFR) investing is one of the fastest-growing property classes.   

Nationwide provider of affordable SFR redevelopment financing, Visio Lending announced it participated as the sole originator of the SFR loans included in Visio 2020-1 Trust’s issuance of seven classes of mortgage-backed securities, “including four investment grade classes rated by S&P Global and DBRS Morningstar,” the company said. 

The transaction included 813 “business-purpose investor loans totaling $160.6 million of original unpaid balance,” originated by Visio and secured by residential, SFR properties across the United States. 

Furthermore, the company said, the transaction brings Visio’s total original loan balance contribution to nearly $900 million across six securitizations. 

“With this transaction, our sixth securitization and first since the arrival of the pandemic, we experienced strong support from our existing bond investors as well as from new investors in this segment,” said Matt Matza, EVP at Visio Lending.

Despite major bond market disruptions earlier this year, and the ensuing pandemic induced economic decline, “Visio remains in a strong financial position having met all of its financial obligations,” explained Bill Kerley, CFO of Visio Lending. “Investors in rental properties remain highly active and we are well-positioned to help them meet their investment goals.” 

This year probably is the most unusual of my career, said Visio’s CEO Jeff Ball, nonetheless Visio’s solid loan underwriting “is shining through with better than expected loan performance.  “We are being battle-tested right now and expect to emerge stronger on the other side of this pandemic.” 

Founded in 2012 in Austin, Texas, Visio lends to small-to-medium size, rental home investors and is an investment grade, bond issuer, according to the company website. 

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