676,535 624,753


$- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

to figures from ATTOM Data Solu- tions. ATTOM reports there were foreclosure filings — default notic- es, scheduled auctions, and bank repossessions — on 624,753 U.S. properties last year. And, despite all of the paperwork, many of these distressed properties were never actually foreclosed on. The reason is that home values have been rising in most markets. The National Association of Real- tors (NAR) says median existing home values reached $249,500 in February — the 84th straight month of year-over-year gains. With rising prices, some distressed owners can simply sell in the open market for enough to cover the debt — and many do! In 2018, says ATTOM, only 230,305 properties were actually foreclosed on. Interest rates are also looking very positive for homebuyers right now, averaging 4.54 percent in 2018 according to Freddie Mac, well below

are likely to impact the way lenders do business moving forward? Let’s take a look.

the long-term average of 8.08 percent going back to 1971. By late March 2019, the big GSE said weekly rates for 30-year fixed-rate financing had fallen to 4.06 percent, down almost half a percent from the 2018 average. In effect, it’s very difficult to see the growing stresses in the under- writing process because the system is now so successful. However, suc- cess masks the reality that low rates and rising prices are not guaranteed. They can come and go as the econo- my evolves. And the economy, as we all know, always evolves. “The U.S. economy has reached an inflection point, with the consensus forecasting real GDP growth to slow from 2.9% in 2018 to 2.4% in 2019, and to 2.0% in 2020,” said Kevin Swift in March. Swift is president of the National Association for Business Economics (NABE). So, what are some of the factors and trends currently happening that

ABILITY TO REPAY Federal rules as well as common sense tell us that lenders must verify the ability of borrowers to repay res- idential mortgages. While there are exceptions for such things as open- end credit plans, timeshare plans, reverse mortgages, and temporary loans (a loan for 12 months or less), the ability-to-repay rule is still the compliance gold standard. Lenders take this stuff seriously, which may explain why the typical loan application vies with “Gone With The Wind” in terms of length and heft. “With the size of an average mort- gage loan at more than 500 pages — and hundreds of different document types — the labor-intensive and costly processing methods used in

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