Last week, over 4,000 mortgage and real estate finance professionals gathered in Austin, Texas for the 2019 MBA Annual Convention and Expo. Industry leaders delivered informative updates and discussed a variety of key topics—we’ve summarized the top takeaways below.
1. HUD announces changes to FCA process
HUD and the DOJ announced that False Claims Act matters will be addressed administratively, in an effort to increase FHA lending. The share of FHA-insured mortgages originated by depository institutions plummeted from 43% in 2010 to less than 14% in 2019, adversely impacting low-income borrowers’ credit access. Under the new plan, HUD will be the first line of review of any claims implicating the False Claims Act. If a case requires further action, it will be escalated to a Mortgagee Review Board, and then finally to the DOJ.
2. Strategic plan but no timeline for GSE reform
FHFA director Mark Calabria laid out his strategic plan to get Fannie and Freddie out of conservatorship. His focus is currently honed on improving their risk profiles. Calabria noted that great progress has been made since he took office in April – leverage against the GSEs went from 1000:1 to 500:1. The timeline for exiting conservatorship is still unclear, although Calabria stated he will not move slowly.
3. Looming recession expected to impact the 2020 refi market
MBA’s chief economist, Mike Fratantoni, projected a possible recession in the first half of 2020, with refinance activity dropping steeply in the second half of 2020. However, originations are still expected to grow slightly in 2020 due to low rates and increasing demand from first-time home buyers. The largest population of first-time homebuyers since the Great Recession is projected to purchase between 2020 and 2022, accounting for up to 9.2 million originations.
4. Hybrid eClosings are a major opportunity
Consumers continue to demand digital experiences, including at the closing table. The main barriers to full eClosings are antiquated notarization laws, which require wet signatures on certain documents. However, hybrid eClosings can still speed up the process by allowing buyers to sign eligible documents electronically, only requiring wet signatures on a few docs. Experts estimated that 93% of loans could be eligible for hybrid eClosing.
5. Be prepared: cybersecurity threats are escalating
Ransomware attacks doubled from 2017 to 2018, and experts predict they will continue to increase. Organizations should prepare for cyberattacks by establishing a backup and testing it regularly. In the event that your organization is targeted, it is essential to report the attack quickly. For example, there is a 70% chance of recovering wired money if wire fraud is reported within 24 hours, but waiting 48 hours decreases the chances to 38%.