11/18/2022

ALTA Responds to Inaccurate Article by Boston Publication About Title Insurance

A recent segment and corresponding article from Boston NPR affiliate WBUR claims that the title insurance industry lacks regulatory oversight and is not transparent with consumers. Below is ALTA’s response to the article’s false and misleading allegations:

It's an opaque business with the lightest level of regulation in the nation.... The federal Consumer Financial Protection Bureau removed the explicit disclosure of title fees when it overhauled mortgage forms in the wake of the financial crisis.

  • The title insurance industry is regulated not only across all 50 states, but also at the federal level, with title and settlement companies required to disclose all fees on both the Loan Estimate, which consumers receive three days after applying for a loan, and the Closing Disclosure, which is provided to homebuyers three days before closing. There are also strict guidelines for the way title and settlement fees are disclosed to consumers and when changed circumstances allow for alterations to the disclosures. The American Land Title Association (ALTA) was proud to work closely with the CFPB to help develop these regulations, which went into effect in 2015.

Title insurers have all this cash to spare because they pay out so few claims. Of the billions of dollars they took in for 2021, they spent less than 3% of that on claims from homeowners, according to the national insurance commissioners association. By comparison, property and casualty insurers spent 73% of their revenue on claims for losses like house fires and vehicle accidents.

  • Title insurance is a fundamentally different product from other insurance products. Unlike other insurance products where most of the upfront cost is marketing, for title insurance the upfront expense is related to conducting a search of public records to underwriting ownership and lien risks. This is why much of the premium goes to pay the title agent or attorneys staff to review title and the purchase of title data from local governments.
  • It is the title insurance company’s willingness to stand behind this work – even if the defect originated in faulty public records – that provides lenders the confidence that they have a first lien mortgage. While it is true that the word “commission” is frequently and misleadingly used to describe the important work of title agents, it makes their good work no less important.

 Ott wound up feeling misled about his lawyer’s total fees and her advice on buying the optional policy.

  • It is critical to understand the difference between a homeowner’s policy of title insurance and a lender’s policy. A lender’s policy only protects against claims that may affect the lender’s loan and does not protect the homeowner’s property rights, which is why title professionals recommend that consumers purchase a homeowner’s policy to protect one of life’s greatest investments.
  • With title insurance, a claim is serious, and a loss means homeownership is threatened. Owner’s title insurance provides protection for as long as the homeowner or their heirs own the property. Having a title insurance policy means that the cost of defense and legal fees are paid by the title insurer for the homeowner.

 In general, consumers are not shopping for this product.

  • Research by the CFPB shows that the TRID regulations, which ALTA helped develop, have helped consumers better understand their closing costs and compare competing offers.
  • ALTA has consistently promoted consumer education to homebuyers, encouraging them to ask their title agent how rates are determined where you live and what services are provided in the fee, as well as to shop around for comparative offerings.

These many years later, across the country, title contracts between insurers and lawyers or agents are either never or rarely reviewed by most state insurance regulators, according to a 2019 survey by the insurance commissioners association.

  • State departments of insurance oversee the industry’s practices and rates to ensure they are not excessive, inadequate or unfairly discriminatory. Insurers must justify their rates (using actuarially supported data) to state regulators. State regulators capture annual revenue and expense data from title insurance agents and underwriters for the purpose of measuring the profitability, competitiveness and reasonableness of title rates and charges.

 A typical residential title search can be done “within a few hours,” Ryan said.

  • Thanks to the investments made by the industry the average title search can be done in a few hours. However even today a title search is still mostly done by a human being. Beyond the search someone will have to review the title documents found in the search, help resolve outstanding issues like getting prior mortgages paid off or making sure there are no outstanding amounts owed to the contractor that put on the houses new deck, prepare the new deed and ultimately facilitate the closing.
  • Forged documents, one of the most common title problems, in addition to falsified documents, invalid deeds and incorrect property descriptions, are just some of the issues that must be examined in the course of a comprehensive title search. Other title risks include recording mistakes, deed indexing errors, unpaid mechanics' liens, judgment liens, income tax or property tax liens, undisclosed easements, claims by missing heirs and claims by ex-spouses. The careful research required to understand and eliminate these risks is performed by a local title agent, online and offline, which is why agents retain a portion of the title insurance premium consumers pay at closing.”

 Critics say title insurance nationally is hugely overpriced.

  • While other forms of insurance have seen rate increases in recent years, the cost of title insurance coverage has actually decreased 6% nationally since 2004 and almost 2% the past two years, according to industry financial statements.
  • Without title insurance, homeowners are not protected from a devastating financial loss – sometimes in the tens of thousands of dollars – that may result from a title defect, tax lien, undisclosed easement, fraud, or forgery. Title insurance is, and will always be, essential, providing homeowners and lenders with peace of mind that they are protected.”

In Iowa, Peter Ott’s title protection would have cost about $625. That’s a fraction of the $4,800 he paid here.

  • The current government-operated system in Iowa is often cited as an alternative to traditional title insurance. However, while the cost for title insurance in Iowa can be lower, although not the lowest, than rates in many other states, comparing title insurance in Iowa and title insurance in other states is comparing apples to oranges. In Iowa, title insurance costs don’t reflect all of the necessary costs consumers have to pay. The total cost that consumers pay for title searches, examinations, and clearing of any title problems in Iowa do not differ substantially from other states. Iowa’s total costs were about the same as those in Maryland, Nebraska, South Dakota, Washington and West Virginia, where private title underwriters are free to do business.

11/10/2022

Freddie: Rapidly Rising Rates, Declining Demand Driving Housing Market Slowdown

Freddie Mac housing forecastMortgage interest rates have increased at the fastest rate since the early 1980s. According to Freddie Mac, the U.S. weekly average 30-year fixed-rate mortgage was 6.94% in the week of Oct. 20. This was up 3.85 percentage points from a year ago according to Freddie Mac’s Primary Mortgage Market Survey.

In the history of the survey, which stretches back to April 1971, mortgage rates have only increased faster in 1980 and 1981. However, in 1980 and 1981, rates averaged 16% and 18%, respectively. Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the ’80s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.

The housing market rapidly decelerated as markets absorbed the impact of higher mortgage rates. Home sales have fallen to a forecasted 5.4 million units at a seasonally adjusted annual rate in the third quarter of 2022 from 7 million earlier this year. Home purchase mortgage applications point to continued contraction in home sales activity. Freddie Mac forecasts that home sales activity will bottom at around 5 million units at the end of 2023. Falling from 7 million to 5 million would be a decline of about 30% and put the contraction in home sales in line with other historical periods when interest rates increased.

As housing market activity continues to contract, Freddie Mac predicts that it will lead to a continued increase in the months’ supply of homes available for-sale from historically low levels last year. The loosening of the once incredibly tight for-sale inventory removes the intense upward pressure on home prices of the past two years. While fewer sales are increasing the months’ supply, that is partially offset by fewer new listings as high mortgage rates disincentivize existing homeowners from moving up or downsizing.

Given the house price and home sales forecast, Freddie Mac estimated home purchase mortgage originations to be $1.9 trillion in 2022, slowing to $1.6 trillion in 2023. With mortgage rates expected to remain elevated, refinance activity is estimated to slow with refinance originations declining from $2.8 trillion in 2021 to $747 billion in 2022 and $310 billion in 2023. Overall, Freddie Mac forecasts total originations to decline from the high of $4.8 trillion in 2021 to $2.6 trillion in 2022 and $1.9 trillion in 2023.

11/08/2022

Good Deeds: ALTA Member Continues Acts of Kindness

Aaron_davis_chainsawIn 2021, ALTA member Aaron Davis became dubbed the “chainsaw man” for his efforts to come to the aid of those impacted by winter storms that created a power crisis in Harper, Texas, leaving more than 4.5 million homes and businesses without power. (The ALTA Good Deeds Foundation provided a $5,000 emergency grant to Harper Volunteer Fire Department last year).

Davis, CEO of Florida Agency Network, took a leave of absence from his company and volunteered in Harper to cut downed tree limbs and clear brush. He helped purchase chainsaws and other items to help the community.

A year later after a chance interaction with an old friend from his hometown, Davis heard about people helping fellow Floridians following the aftermath of Hurricane Ian. Davis soon was leading the Florida Baptist Disaster Relief unit, which had boots on the ground in Port Charlotte, Fla.

Davis talked with his brother, Aaron, and the two decided to help with the cleanup and purchased 30 chainsaws.

Stationed at Murdock Baptist Church, the Florida Baptist Disaster Relief unit prepared more than 70,000 meals for those in need within a week of the storm’s impact. Hundreds of volunteers helped provide food, shelter, water and labor — running chainsaws, cleaning up debris, tarping roofs and much more.

“Just seeing all the stories come in and I’m like, ‘oh my gosh, we’re used to hurricanes, this is way worse than a hurricane,’” Aaron told 10 Tampa Bay. “This is a hurricane followed by seven days of freezing. You’re not going to necessarily drown or get hit by a flying object, but you’re going to freeze to death.”

Because of their efforts, the Davis brothers were features in People magazine and were featured on an episode of The Kelly Clarkson Show.

11/03/2022

ALTA Awards Title Webbies

ALTA announced the winners of the 2022 Title Webbies, an awards program recognizing member companies that have created or redesigned the best industry consumer-facing website within the past year.

Nominees were judged on mobile friendliness, user experience, social media integration, image/video use and content quality. The three award winners were CertifID, D.Bello and The Title Team.

Certifd_webby“Congratulations to the winners of the Title Webbie Awards,” said ALTA CEO Diane Tomb. “It is incredibly important that title industry professionals think about how to provide consumers with the data and knowledge they need to be prepared for the real estate transaction. I am proud that these ALTA members have chosen to realign their websites to ensure consumers have what they need to make informed choices.”

CertifID, located in Grand Rapids, Mich., provides wire fraud recovery and prevention services to real estate professionals as well as consumers. A 2022 ALTA Elite Provider, the company was awarded a Title Webbie because its website breaks its services down by roles, helping consumers understand their exposure to real estate wire fraud scams when buying or selling a home or other property and how they can protect themselves from fraudsters. CertifId’s website also includes multiple resources, including webinars, videos and case studies detailing topics such as types of mortgage fraud, how to avoid real estate scams and much more.

“CertifID is focused on protecting customers from wire fraud, which continues to reach new highs annually,” said Tyler Adams, CEO of CertifID. “We knew that education would be key to ongoing prevention and designed our website with that purpose in mind. We offer a range of content and resources for title companies, law firms, Realtors and homebuyers and sellers to be informed about the threats and how to stay secure.”

Dbello_webrryA customizable title production process company, D. Bello also took a Title Webbie back to its homebase in Newport Beach, Calif. The company’s website includes a quick tutorial on the benefits of title insurance, features ALTA videos on real estate wire fraud and the role of title insurance in protecting property rights and provides resources to find a local title agent through ALTA’s consumer-facing website, HomeClosing101.org.

“When we looked at redesigning our website to match our new branding and messaging, we wanted a website that would stand out,” said Andrew Acker, D. Bello’s chief operating officer. “D. Bello prides itself on providing the highest quality, customized title production services for our clients, and we love that our website reflects that. It is the result of a lot of hard work and collaborative effort with our marketing partner, Bowe Digital. This award truly affirms our mission heading into this, and we couldn’t be more excited.”

A title company headquartered in Bismarck, N.D., The Title Team was the sole title agent to be awarded a Title Webbie. The Title Team website is filled with a wealth of information for homebuyers and sellers, including ALTA videos as well as the company’s own curated library of content. Homebuyers and sellers can find all the information they need to know what to expect during the closing process and how to be on the lookout for real estate wire fraud scams.

Titleteam_webby“We are honored to receive the 2022 Title Webbie Award from the American Land Title Association,” said Nick Hacker, president and CEO of The Title Team. “Last year, we began the journey of a companywide rebrand. This not only brought multiple brands together from across the Midwest, it also created the perfect opportunity for us to reshape our website into a user-friendly, clean and optimized site. Our new site not only highlights our core values and our community-focused culture, but it also allows our customers to connect with their local Title Team and learn about our services and other important title industry topics. The redesign of our website was a team effort between The Title Team and Flint Group, a marketing agency in the Midwest. Again, we are so honored to receive this award and share our beautiful new site with the world.”

Solidifi: More Borrowers Reviewing Documents Online Prior to Closing

Closing experience digital
Source: Solidifi

Borrowers are becoming more comfortable reviewing documents digitally prior to closing, according to the Solidifi 2022 Consumer Mortgage Experience Survey.

The survey showed that 59% of borrowers want to review documents digitally prior to closing. This is up from 50% in 2021.

Solidifi polled over 1,000 residential borrowers 18 years of age or older in the United States who have refinanced or purchased a home within the last two years to assess experiences with the closing and appraisal process.

“This year’s survey results reaffirmed that borrowers continue to value in-person interactions for both appraisals and closings,” said Solidifi President Loren Cooke. “People have a better experience when they interact with the appraiser and closing agent. While digital is increasingly becoming part of the closing experience, the process itself is becoming more—not less—personal.”

According to the survey, borrowers continue to want in-person closings for better communication and increased trust. In fact, 81% said that face-to-face is the ideal way to close versus 19% that prefer remote online notarization.

It should be noted however, that of the 81% who prefer in-person interaction, 60% want a paper process, 25% prefer a hybrid process of both paper and electronic documents and 15% prefer in-person with fully electronic documents.

“Consumers want more closing options and flexibility, and as an industry we still have work to do to educate consumers on the options available to them,” Cooke said. “But regardless of how the closing is conducted, the experience has to be flawless.”

The survey also showed trust in e-signatures continues to increase, rising from 74% in 2019 to 89% in 2022.

Good communication is associated with higher satisfaction with the title company, and poor communication is the top reason for dissatisfaction, the survey showed. Having a closing agent who communicates well and is prepared has become even more important. Survey results showed that 75% of borrowers want a closing agent who clearly communicates the process and what borrowers need to do at each step. This is up from 59% in 2021.

Closing experience title

Ransomware Incidents Skyrocket in 2021, FinCEN Reports

Fincen ransomware
Total Amount from Ransomware-Related BSA Filings and Incidents, 2011 to 2021

Ransomware continues to pose a significant threat to U.S. critical infrastructure sectors, businesses and the public, according to a report released by the Financial Crimes Enforcement Network (FinCEN).

The report provides analysis of ransomware-related Bank Secrecy Act (BSA) filings for 2021, but focused on trends during the second half of the year. It addresses the extent to which a substantial number of ransomware attacks appear to be connected to actors in Russia.

According to the analysis, FinCEN received 1,489 ransomware-related filings worth nearly $1.2 billion in 2021. This represents a 188% increase compared to the total of $416 million in 2020. FinCEN said this potentially reflects an increase in ransomware incidents or improved reporting and detection.

FinCEN Acting Director Himamauli Das said the analysis is a reminder that ransomware—including attacks perpetrated by Russian-linked actors— remain a serious threat to national and economic security. He said this highlights the importance of BSA filings, which allow FinCEN to uncover trends and patterns in support of whole-of-government efforts to prevent and combat ransomware attacks.

“Financial institutions play a critical role in helping to protect the United States from ransomware-related threats simply by fulfilling their BSA compliance obligations,” Das added.

Specific to the title industry, a recent ALTA survey showed that cyber attacks targeting title and settlement companies remained the same or increased over the past year.

What is Ransomware?

  • Ransomware is malicious software that encrypts a victim’s files and holds the data hostage until a ransom is paid, most often in Bitcoin. In the last two years, FinCEN reported that ransomware actors have shifted from a high-volume opportunistic approach to a more selective methodology in choosing victims, targeting larger enterprises, and demanding bigger payouts to maximize their return on investment.
  • Some ransomware actors have diversified their revenue streams using a ransomware-as-a-service (RaaS) business model in which ransomware creators sell user-friendly ransomware kits on the dark web or outsource ransomware distribution to affiliates in exchange for a percentage of the ransom. Additionally, since at least late 2019, ransomware groups have adopted new extortion tactics to maximize revenue and create an additional incentive for victims to pay. In one such tactic, known as “double extortion,” ransomware operators exfiltrate massive amounts of a victim’s data encrypting it and then threaten to publish the stolen data if ransom demands are not met.

Detection and Mitigation Recommendations

  • Incorporate indicators of compromise (IOCs) from threat data sources into intrusion detection systems and security alert systems to enable active blocking or reporting of suspected malicious activity.
  • Contact law enforcement immediately regarding any identified activity related to ransomware, and contact OFAC if there is any reason to suspect the cyber actor demanding ransomware payment may be sanctioned or otherwise have a sanctions nexus.
  • Promptly report suspicious activity to FinCEN, highlighting the presence of “Cyber Event Indicators.” IOCs, such as suspicious email addresses, file names, hashes, domains, and IP addresses, can be provided in the SAR form. Information regarding ransomware variants, requested methods of payment, or other information may also be useful to law enforcement and for trend analysis in addition to virtual currency addresses and transaction hashes associated with ransomware payments.
  • Review financial red flag indicators of ransomware in the “Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments” issued by FinCEN in November 2021.

Report Suspicious Cyber Activity

  • To report a ransomware incident, contact CISA at report@cisa.gov, 888282-0870 or www.cisa.gov/stopransomware
  • Contact your local FBI or U.S. Secret Service field office or the FBI’s Internet Crime Complaint Center (IC3) at www.ic3.gov.
  • Contact OFAC at ofac_feedback@treasury.gov if there is any reason to suspect the cyber actor demanding ransomware payment may be sanctioned or otherwise have a sanctions nexus.

Develop a Cybersecurity Risk Management Plan

  • Title and settlement companies report that the volume of cyber attacks have either increased or remained the same last year when compared to 2020. Because of this, you and your staff need the skills and tools to respond to an ever-changing cyber landscape. Register an upcoming free ALTA Insights webinar, sponsored by the FNF Family of Companies, to learn what considerations you may want to put into place for your company’s cyber safety and risk management in 2023. Register for Webinar

10/20/2022

ALTA Sets Record Membership

 

ALTA marked a new all-time high of record membership with more than 6,500 member companies.

The association already has surpassed its 2020 membership record by 65 companies. In 10 years, ALTA’s membership has increased by 57 percent.

“ALTA is honored to be the voice of 6,500 member companies—and to have their trust that we will represent their best interests in Washington D.C.,” said ALTA CEO Diane Tomb. “At the height of the COVID-19 pandemic, ALTA worked with industry partners across the nation to ensure remote online notarization was available to any Americans who needs it. Now, the U.S. House of Representatives has passed a package of bills that included the ALTA-supported SECURE Notarization Act, and we continue to advocate for similar passage in the U.S. Senate. ALTA also has successfully advocated for retention of the current treatment of like-kind 1031 exchanges and endorsed federal legislation to fund the research and tracking of discriminatory covenants. As title insurance professionals face a changing market, ALTA provides education, training and networking opportunities to help our members continue to thrive.

“ALTA members play a critical role in the ability of American households to build wealth through homeownership and protect consumers by ensuring the proper transfer of real estate from seller to buyer, securing property rights and facilitating the growth of the secondary mortgage market. ALTA will support our growing membership as they continue to protect the property rights of millions of homeowners across the United States," Tomb continued.

ALTA’s active, committed and diverse membership includes title insurance companies, title and settlement agents, abstracters and real estate attorneys. The majority of these members are small business owners who rely on the variety of benefits and services that ALTA provides. For information on the benefits of ALTA membership, click here.

09/28/2022

RON Use Projected to Increase in 2022

Companies currently offering remote online notarizations (RON) expect these types of closings to increase in 2022, according to ALTA’s latest 2022 Digital Closing Survey.

The survey of 390 title professionals showed that 62% of companies offering RON believe this offering will increase over the next year, while a third reported they don’t anticipate any change.

Meanwhile, according to the 2022 survey, the number of companies offering RON decreased to 30% in 2021 compared to 35% who indicated their company offered RON in 2020. Prior to the health crisis, a 2019 survey showed that 14% of companies offered digital closings three years ago.

“During the COVID-19 pandemic, the title and settlement professionals responded during historic mortgage origination volume to meet customer needs and deliver digital closings to help keep everyone as safe as possible,” said Diane Tomb, ALTA’s chief executive officer. “The desire for digital closings remains, and despite the drop in companies offering RON in 2021 from 2020, the percentage of transactions completed using this closing option held steady at 5%. This is a service industry, and our members will always provide the customers’ preferred closing method, whether it is online, in person or hybrid in some fashion.”

The survey showed that 77% surveyed believe requests from lenders, real estate agents and consumers to use RON would speed up adoption. Nearly half of title companies offering RON actively market it to customers, but it is not viewed as a competitive issue by those not offering the option. Companies are using various channels to market RON capabilities, including social media, website, direct emails, print ads and verbal communication to customers and clients.

Regarding efficiencies and cost savings, survey results show responses remains fairly split as the industry continues to adopt and get more familiar with the technology.

Based on your experience in implementing RON, do you agree or disagree with the following statements?

Closing survey

Currently, 42 states have enacted laws allowing permanent access to remote online notarization. The ALTA-supported Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act (H.R. 3962) was passed by the U.S. House of Representatives earlier this year. A bipartisan companion bill has been introduced in the Senate. The bill would permit immediate nationwide use of RON, create national minimum standards for its use and provide certainty for the interstate recognition of RON.

Additional survey highlights:

  • Survey results show that 75% of residential transactions closed via RON were for cash and seller-side only deals. This percentage was nearly the same as results from the 2021 survey.
  • Of companies that offer RON, 64% utilize one RON platform. This is a significant change as more than 50% in the 2021 survey indicated they used two or more vendors. The results indicate that companies are identifying preferred RON platforms to work with.
  • 65% of customers have a positive perception of RON closings. This is up from 60% of customers who had a positive perception of RON closings the prior year.
  • 78% of those surveyed said they are training a team of experts versus training their entire staff to support RON closings. This is up from the 2021 survey, where 64% indicated they trained a team of experts.
  • Also highlighting that companies are focusing on having RON experts on staff, the survey showed that companies employ fewer RON notaries. 87% of companies that offer RON have one to five RON notaries on staff, compared to 59% in 2020. Conversely, this year’s survey showed that only 4% of respondents employ more than 25 RON notaries. This compared to 12% that had more than 25 notaries who could perform RON on staff in 2020.

09/22/2022

Fannie Mae: Housing Expected to Cool Further as Mortgage Rates Move Higher

Economic growth is projected to resume in the second half of 2022, but the combination of high inflation, monetary policy tightening and a slowing housing market is likely to tip the economy into a modest recession in the new year, according to the latest Fannie Mae economic forecast.

Due largely to the higher mortgage rate environment, Fannie Mae lowered its forecast for single-family total home sales in 2022 and 2023 to 5.71 million and 4.98 million, which would represent declines of 17.2% and 12.8%, respectively. While multifamily construction remains strong, Fannie Mae also revised downward its multifamily starts forecast for 2022 to 542,000 units but continues to expect demand for rental units to remain strong because of the single-family market’s relative unaffordability.

“In our view, the recent interest rate surge is due to the market’s recognition of two critical factors: that inflation is indeed not transitory, and that, to tame it, the Federal Reserve will need to be resolute, even at the risk of possible recession,” said Doug Duncan, Fannie Mae’s chief economist. “Inflation’s entrenchment—and the policy action likely required of the Fed—confirms the expectation in our forecast of a moderate recession beginning in the first quarter of 2023. That said, the rise in rates is having the Fed’s desired effect on housing, as house price growth began to slow in June. We expect the slowdown in housing to continue through 2023 as affordability constraints mount for potential homebuyers, and considering, too, that refinance activity has been significantly curtailed by the rise in mortgage rates.”

The Federal Reserve on Sept. 21 raised benchmark interest rates by another three-quarters of a percentage point and indicated it will keep hiking well above the current level. In its quest to bring down inflation running near its highest levels since the early 1980s, the central bank took its federal funds rate up to a range of 3%-3.25%, the highest it has been since early 2008, following the third consecutive 0.75 percentage point move.

Home Sales

Existing home sales fell 5.9% in July to an annualized pace of 4.81 million, in line with our expectations. On an annual basis, sales were down 20.2 percent. With the exception of the initial COVID shutdowns in early 2020 and hurricane-related disruptions in 2015, this was the slowest pace of sales since 2014. Mortgage application data point to further sales declines in the near term, and with mortgage rates rising again, Fannie Mae downwardly revised its existing home sales outlook through 2023. It now projects 2022 total year existing sales to decline 16.5% from 2021, followed by a further decline of 13.3% in 2023. We will release our quarterly forecast update of the Fannie Mae Home Price Index in October.

SEPT Home Sales
Source: Fannie Mae

New home sales and construction continue to come in weaker than anticipated. New home sales fell 12.6% in July and were down 32.3% from a year prior. The temporary pull back in mortgage rates last month may lead to some stabilization in the August new home sales number, but Fannie Mae expects further softening moving forward. At the current sales pace, the months’ supply of new homes on the market was 10.9 in July, up from 9.2 in June. This was the highest level since 2009. To this point, homebuilders do not appear to be offering incentives sufficient to move growing inventories, however, many publicly traded homebuilders continued to report historically elevated gross margins through the second quarter, suggesting room for greater discounting in the future. Homebuilders may have been reluctant to do so until recently as supply chain bottlenecks and labor shortages have resulted in an elevated share of homes for sale still being under construction compared to the historical norm. Currently, comparatively few finished homes are on the market, which may limit the need for builders to price more aggressively. However, over the past couple months, this number has begun to move upward, suggesting homebuilders may soon offer greater price concessions to drive sales.

Econoutlook092022d
Source: Fannie Mae

Multifamily housing construction continues to be strong. However, Fannie Mae revised downward its forecast for multifamily starts in 2023, due to a higher interest rate outlook. Fannie Mae expects activity will slow in 2023 along with a slowing economy, but demand for rental units should remain comparatively strong. As single-family home purchase affordability reaches lows not seen since 2006, many households will likely remain in a rental unit longer than they otherwise would, according to Fannie Mae.

Mortgage Originations

Fannie Mae’s forecast for 2022 purchase volumes remains at $1.7 trillion, essentially unchanged from last month. It’s now expected that purchase volumes will fall about 1.5% in 2023 to just under $1.7 trillion, a downward revision of $17 billion from last month’s forecast.

In the refinance market, higher mortgage rates have significantly lowered the expected market size for 2022 and beyond. Fannie Mae projects 2022 volumes to total $731 billion, $38 billion lower than last month’s forecast. Fannie Mae expects refinance volume to decrease further in 2023 to reach $490 billion, down $102 billion from last month’s forecast.

08/25/2022

ALTA Good Deeds Foundation Helps Deliver Personalized Bedroom for 7-year-old Cancer Survivor

BedroomA grant from ALTA’s Good Deeds Foundation (AGDF) helped make a new bedroom for a young girl in Massachusetts a reality.

In March, the AGDF awarded a $6,000 grant to Room to Dream Foundation, which is dedicated to helping children with chronic illnesses. The Room to Dream Foundation recently stepped in using the AGDF donation to give Ellie, a 7-year-old cancer survivor, a new personalized bedroom.

For the past two years, Ellie has undergone a treatment plan for Acute Lymphoblastic Leukemia, a type of blood and bone cancer. She is now in remission.

The Room to Dream Foundation looks to create healing environments in bedrooms for children facing chronic illnesses. The remodel features two ways for Ellie to get into her bed—either by ladder or a rock wall.

The Room to Dream Foundation was one of 20 organizations that received $6,000 grants from the AGDF. To date, the AGDF has raised nearly $1 million and given $428,000 to 70 organizations.

The Foundation will announce its next round of grants during ALTA ONE, which will be held Oct. 11-14 in San Diego.

Click here to make a donation.