Mortgage Updates Weekly - An Initiative by ShadowFax Mortgage
November 30, 2020
Dear Reader,
The end of the year is in sight, and the refinance fee will go into effect from tomorrow. We review the happenings of the past week and month in this edition.
For those who are new to us, we at ShadowFax Mortgage, aim to help industry professionals keep a tab on the mortgage space through our weekly newsletter. Feel free to reach out to us in case of any queries or feedback.
Conforming Loan limits increased
Last week, the FHFA announced an increase in the baseline loan limit for mortgages that are considered as conforming loans. Mortgages are eligible to be backed by Freddie and Fannie Mae only if they fall within these conforming limits. Set at $510,400 for 2020, the limit for next year has been increased to $548,250. This is true for most of the U.S., except high price areas where 115% of the median price of a home will exceed the baseline limit. The Housing and Economic Recovery Act (HERA), which initially set the limits to reflect the changes in house pricing, allows a celling of 150% over the baseline loan limit in such areas. The maximum loan limit for 2021 will have increased in all but 18 counties or equivalents in the U.S.
Janet Yellen becomes first woman to lead treasury
Joe Biden plans to appoint Janet Yellen as the Treasury Secretary, according to a source close to the transition team. Not yet officially confirmed by the State, the appointment, if effective, will make Janet the first woman Treasury Secretary in the history of the U.S. She is also the first Chairwoman of the Federal Reserve, appointed in 2014 by the then President Obama. During her tenure, Yellen had successfully brought down unemployment while keeping inflation in check. She has also served as the head of President Bill Clinton’s Council of Economic Advisers in the late 1990s. Yellen echoes Biden’s stance that the first priority will be to bring the coronavirus pandemic under control. The purported appointment is favored by many; however, it seems Yellen faces a daunting challenge in hauling back the economy to stability.
Refi applications hit 7-month high; mortgage applications rise
According to a report by the Mortgage Bankers Association on Nov 25, mortgage applications increased by 3.9% (over previous week) for the week ending on Nov 20. This is based on the Market Composite index, which is considered a reliable indicator for loan application volume. Meanwhile, the refinance index had increased 5% over the previous week and was 79% higher than the previous year’s value. As low mortgage rates attracted more borrowers into the market, the Refinance index and share of refinance applications reached their highest in 7 years. With the new adverse market fee set to take effect from tomorrow, it remains to be seen if the applications for refinance will stay high.
Wemlo develops AI for mortgage processing
Startup Wemlo is an innovative fintech company that provides third-party mortgage loan processing services. Founded in 2018, in Florida, Wemlo developed and launched ATHENA, their new AI technology that drives their platform. Athena identifies discrepancies within the mortgage loan application including document verification based on loan type to mitigate conditions. This is the first solution that combines with third party loan processing. David Rogove, co-founder, claims that helping to identify potential issues in the form 1003 mortgage application (before it is sent to underwriting) speeds up the application process, and increases efficiency for the mortgage originator. This intelligence continues with the ability to request title and automatically generate fees.