New York MSR Conference Update
Here are a few updates from the MSR Conference in New York from November 9-10:
We had a great participation and speakers from Rythm/ Shellpoint, Computershare,Balbec, Bank of America and JP Morgan Chase. Let me give you a few bullet points on some things discussed at the conference that caught my attention:
1. NonQM market is growing, more and more lenders are looking to enter
2. HELOC/2nd lien market is growing, but facing the highest risk of default
3. DSCR (Airbnb) is pulling back, as economics does not make sense anymore; Liquid reserves are now being verified for DSCR; In some zip codes math does not make sense anymore;
4. Next year Builder permits are projected to grow, builders with origination arm (like DH Horton or Pulte Homes) had 50% margin on homes sold 2 years ago and can lower the rate below market rates, sacrificing the margin to 25% but increasing velocity. Builders are now Thinking of building less, but keeping higher prices (similar to the luxury car market).
5. More Capital market activity Due to Basel 3 regulation on required increase of bank's reserves, banks are expected to sell assets to get cash
6. Originators and servicers are focused on the Recapture marketplace for borrowers they currently work with. Eventually these customers are gonna look to make a play. And as soon as rates are actually dropping, borrowers might refi with the same lender or servicer.
7. Home and Mortgage insurance is actually a material item together with tax payment increases. Just insurance alone had 3 x increase in CA and FL markets, which is really equivalent to 2% rate hike. On average, servicers see 48% increase in insurance and 16% increase in taxes year over year. This has to be addressed.
8. Due to still high equity in properties, servicers saw low delinquency in the portfolios. Borrowers pay home mortgages, before they pay credit card and auto expenses.
9. FHA loan delinquencies ticked higher by half a basis point, which is still low but it showing the wrong trend
Here are a few updates from the MSR Conference in New York from November 9-10:
We had a great participation and speakers from Rythm/ Shellpoint, Computershare,Balbec, Bank of America and JP Morgan Chase. Let me give you a few bullet points on some things discussed at the conference that caught my attention:
1. NonQM market is growing, more and more lenders are looking to enter
2. HELOC/2nd lien market is growing, but facing the highest risk of default
3. DSCR (Airbnb) is pulling back, as economics does not make sense anymore; Liquid reserves are now being verified for DSCR; In some zip codes math does not make sense anymore;
4. Next year Builder permits are projected to grow, builders with origination arm (like DH Horton or Pulte Homes) had 50% margin on homes sold 2 years ago and can lower the rate below market rates, sacrificing the margin to 25% but increasing velocity. Builders are now Thinking of building less, but keeping higher prices (similar to the luxury car market).
5. More Capital market activity Due to Basel 3 regulation on required increase of bank's reserves, banks are expected to sell assets to get cash
6. Originators and servicers are focused on the Recapture marketplace for borrowers they currently work with. Eventually these customers are gonna look to make a play. And as soon as rates are actually dropping, borrowers might refi with the same lender or servicer.
7. Home and Mortgage insurance is actually a material item together with tax payment increases. Just insurance alone had 3 x increase in CA and FL markets, which is really equivalent to 2% rate hike. On average, servicers see 48% increase in insurance and 16% increase in taxes year over year. This has to be addressed.
8. Due to still high equity in properties, servicers saw low delinquency in the portfolios. Borrowers pay home mortgages, before they pay credit card and auto expenses.
9. FHA loan delinquencies ticked higher by half a basis point, which is still low but it showing the wrong trend
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