So far, 2023 has been an extremely challenging year for lenders (to say the least), but recently, there have been several positive developments that, if not worth celebrating, should at least be added to the “glass half-full” column.
In no particular order, these include:
eNote adoption continues
In 2022, MERS reported that 322,517 eNotes were registered on its eRegistry. While this number was down sharply on a unit basis, as a percentage of overall eNotes to overall registration the number held steady at approximately 6% of the total. This suggests that 1) eNotes are not just for refinances – which were previously thought to account for the majority of eNotes, but lenders clearly are using them in purchase loans as well, and 2) Lenders haven’t lost sight of the economic and quality-control advantages that digital mortgages provide. So yes, there are headwinds but eNote adoption is continuing, even in this difficult market cycle.
Home equity is alive and well
Transunion recently came out with its 2023 forecast, and not surprisingly, home equity lines and loans were a standout. The company estimated that more than 84 million homeowners had tappable equity with the median amount being $236,000. Transunion noted that current home equity balances, both HELOCs and HELs, now total $400 billion. In 2022, more than 2.7 million home equity products were originated, and this year, the company expects that number to grow by nearly 25% to more than 3.7 million units. Not surprisingly, our company is seeing growing interest in our HELOC document solutions at IDS and our new OmniVault for Real Estate which is able to support both digital HELOCs and digital first mortgages.
FHA reduces premiums
The Biden administration recently announced steps that will make FHA mortgages more attractive to homebuyers. Specifically, FHA is cutting its mortgage insurance premiums from 0.88% to 0.55% which is expected to lower mortgage costs for approximately 850,000 homebuyers, in some cases by as much as $800 per year. This is good news for homebuyers going into the spring homebuying season. Doing FHA eNotes could also save lenders another several hundred dollars per transaction. That program, according to Ginnie Mae executives, is gaining traction. According to the Agency’s latest annual report, in 2022 Ginnie Mae securitized more than $14.7 billion in digital collateral.
RON standardization efforts continue
The U.S. House of Representatives has again taken up and passed the SECURE Notarization Act, which came close to becoming federal law last year. The bill would create the first-ever national standards for remote online notarization (RON) in all 50 states – currently 42 states allow for RON. It now moves on to the Senate where it stalled last summer. This time proponents hope to overcome the concerns of a few senators who blocked last year’s bill.
These positive “wins” are indicators that despite the continued slowdown in originations, progress is still being made in key areas, like digital transformation and housing affordability, even in down cycles.