Genworth: First-time buyers restrained, but active in Q2

The COVID-19 quarantine and the resulting recession negatively affected first-time homebuyers in the second quarter. The Genworth Mortgage Insurance Q2 2020, First-Time Homebuyer Market Report found the number of first-time buyers fell 18%, compared to the previous quarter, to a seasonally adjusted annual rate of 1.86 million.

The housing market began correcting in April, still the number of first-time homebuyers fell compared to “the most first-time homebuyers since 2006” reported in Q1 2020, said Tian Liu, chief economist of Genworth Mortgage Insurance, suggesting the first-time homebuyer market was adversely affected by COVID-19 like the rest of the economy.

First-time homebuyers purchased 539,000 single-family homes in Q2 2020, down 4.6% from a year ago. Even so, the report notes first-time homebuyers “remained the most active segment” representing 40% of single-family home sales and 57% of all purchase mortgages.

First-time homebuyers out-performed repeat buyers who purchased 793,000 units, down 19% from a year ago. Despite the slower pace first-time homebuyer activity still “yielded just over 1 million Americans becoming first-time homebuyers” in the first half of 2020, up four percent compared to a year ago.

Lower rates helped to ease housing affordability for first-time homebuyers at 3.36% in June, the lowest point since 2012, reducing the monthly principal and interest cost by two percent from Q1 2020.

Totaling 449,000, a record 83% of all first-time homebuyers, used some type of low-down payment mortgage product to finance their home purchase in Q2 2020.  

Low-down payment conventional mortgages, enabled by the private mortgage insurance (PMI) industry, helped 207,000 first-time homebuyers in Q2 2020, financing 38% of these homebuyers, up from 30% in Q1 2020, “and a new record for the industry,” according to the report.

State-by-State the housing market staged a strong recovery that exceeded all expectations, the report found. 

Nationally, the number of rate locks by first-time homebuyers increased by 55% between April and June. “No states reported negative growth during this period,” while New York, Pennsylvania, New Jersey and Michigan saw recoveries in first-time homebuyer rate locks of over 100%.

The housing finance system has largely maintained credit availability to date through “prudent underwriting, having adequate capital in the financial system, a significant presence for the agency market that will take credit risk during periods of market stress,” Liu wrote, and due to continued investment in technology.

The private mortgage insurance industry played a significant role in maintaining credit availability, he said, “financing over 200,000 first-time homebuyers, or almost four out of every ten first-time homebuyers.”  

State regulators initiate exam for national fintechs

Multi-state coordination of regulatory requirements for nationwide fintechs are driving initiatives that will benefit banks, nonbanks, their customers and other financial services companies across the nation. 

The Conference of State Bank Supervisors (CSBS) has launched a state-initiated nationwide program that requires payments processing firms to take a single, inclusive exam that satisfies the regulatory requirements of all states. 

CSBS already has market tested its “one company, one exam” pilot program. Named MSB Networked Supervision, the initiative will apply to 78 of the nation’s largest payments and cryptocurrency companies that combined move more than $1 trillion a year in customer funds, according to CSBS. 

Money transmitters operating in 40 or more states – and their clients – will benefit from streamlined state supervision in 2021.

“One company, one exam is a significant and important shift in how state regulators will ensure compliance with consumer protection and safety and soundness standards for the largest payments companies,” said Kevin Hagler, Georgia Department of Banking and Finance commissioner and CSBS Board chair. “By working together and relying on the excellent work of fellow state regulators, we will be able to do even more.”

Building on years of multi-state coordination, CSBS explained in a statement, “this exam protocol will enable states to fine tune a risk-based approach to each company’s operations,” and will make it easier to follow up on compliance issues throughout the year.

During the single exam, one state takes the lead overseeing a group of examiners sourced from across the country, relying on experts from all states to bring insight on topics such as cyber security and anti-money laundering. It also helps regulators to free up state resources, the statement notes.

The one exam initiative is a direct outcome of the CSBS Fintech Industry Advisory Panel recommendations. The panel emphasized the need to increase multi-state exam coordination and supervision of financial technology companies, as noted in the CSBS fintech accountability report published in January 2020. 

The report is part of CSBS Vision 2020, a collection of initiatives that aim to build “a networked system of nonbank licensing and supervision,” according to CSBS – which represents bank regulators from all 50 states and territories supervising 79% of all U.S. banks and non-depository financial services.

“This announcement represents years of work by state agencies to move networked supervision forward,” said Rick St Onge, Money Transmitter Regulators Association board president and Washington State Department of Financial Institutions examinations chief. It is the logical next step “to more effectively and more efficiently supervise the growing number of nationally operating companies.”

SitusAMC acquires ComplianceEase

SitusAMC Holdings Corp., an independent provider of commercial and residential real estate finance advisory services is expanding its mortgage technology portfolio.SitusAMC announced the acquisition of LogicEase Solutions Inc., the parent company of residential mortgage compliance software and risk management fintech ComplianceEase

ComplianceEase has supported mortgage originators, capital and secondary market participants and regulators since 2001, processing audits for over 90 million loans. 

Headquartered in Silicon Valley, ComplianceEase will operate as a wholly owned subsidiary of SitusAMC “with no planned changes to existing staff or operations,” the company said in a statement. The ComplianceEase management team also will join SitusAMC.

“SitusAMC was a logical choice for us given the company’s expertise in regulatory compliance requirements and passion for innovative technology,” said John Vong, a founder of ComplianceEase who will stay on as Chairman. 

“This acquisition is an important step in our goal of bringing greater automation and transparency to the residential market,” said Michael Franco, CEO of SitusAMC. 

“The combination of the ComplianceEase product set and our existing technologies enhances our position as a leading technology provider for the mortgage industry. Clients that fully participate in our ecosystem of solutions will ultimately be able to reduce secondary market trading diligence from days to minutes.”

Currently SitusAMC’s growing technology portfolio includes system-of-record technologies for custodians, loan owners, secondary market participants, and warehouse lenders.

ComplianceEase’s software solutions include:

  • ComplianceAnalyzer is a widely used mortgage compliance solution that runs fully automated loan audits and comprehensive reporting through the proprietary interactive dashboard, RiskIndicator.
  • TRID Monitor, an auditing solution, provides disclosure testing to ensure that loans comply with the latest TRID rule and other federal and state laws and regulations.
  • The Pre-Exam Portal is a free application that enables lenders to run mock e-Exam loan-level audits based on regulatory compliance data, prior to submitting to regulators.
  • License Manager operates as an intuitive portal to verify identifications, state licenses, and federal registrations within seconds, in compliance with Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act).

“ComplianceEase is a great fit with our broader technology platform,” said Chris Consoli, chief technology officer at SitusAMC. With an expanding technology team of 350 technologists, “we are rapidly making progress on industry-moving initiatives.” 

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