The number of title and settlement companies offering digital closings has increased 228% since 2019, as more of the industry moves online in the wake of the COVID-19 pandemic, according to HousingWire.
Per a survey of 300 title professionals conducted by the American Land Title Association, only 14% of professionals offered digital closings prior to the health crisis. Now, in 2021, 46% offer digital closings, according to Diane Tomb, ALTA chief executive officer.
“Since the onset of the pandemic, title and settlement professionals rapidly adapted their processes to meet the needs of their customers and to continue facilitating safe and secure closings, and one of the title industry’s most important tools in this process has been remote online notarization,” Tomb said.
According to the survey, more than 5% of transactions were closed with some variation of RON. Thirty-five percent of companies currently offer RON to close deals.
Adoption of remote online notarization soared 547% in 2020, according to a ALTA survey of major vendors working in the RON space. To date, 34 states have passed permanent RON legislation, and ALTA reported in December that RON is being utilized most extensively in Florida, Texas and Virginia, with a usage uptick also being seen in Midwestern states.
Of those surveyed, 64% expect an increase in RON closings during 2021, with lender and consumer requests the top factors that would most likely alter a company’s timeline to implement technology to conduct RON closings. RON was used the most in transactions involving sellers only (40%) and cash deals (23%), followed by refinances (17%) and purchases (14%).
Also, of those who took the survey, 52% said closing times decreased utilizing RON due to the number of documents signed ahead of time, while 43% reported cost savings. The average expense to implement RON was just under $30,000 per office, according to the survey.
Cities with the biggest share of homeowners in danger of foreclosure
Some mortgage borrowers aren’t out of the woods yet from COVID-related challenges, according to MarketWatch. Around 14.7% of the 7.6 million FHA mortgages outstanding nationwide were delinquent as of May, up slightly from the previous month. Additionally, 10.5% of these loans were seriously delinquent, meaning they were 90 days or more past due and in danger of going into default.
The overall number of Americans requesting forbearance has declined in recent weeks, but the percentage of borrowers facing financial challenges remains higher among FHA borrowers. The FHA program targets homeowners with lower credit scores and less money saved for a down payment — the program tends to be popular among first-time buyers and people of color.
The open question is what happens to the FHA borrowers in distress currently when the clock runs out on their forbearance. Most Americans who exited forbearance successfully resumed making their payments and were able to arrange to have the money they owe deferred until the end of the loan’s term. Those who can’t make their normal payments as they previously did may be able to have their loan modified, but that isn’t a given.
Any homeowner who isn’t able to sell their home or modify their loan is likely to face foreclosure or other financially challenging options, such as a short sale, the researchers warned. Whether a homeowner leaves their home by choice or through foreclosure at the end of all this, it will have the effect of adding supply to the market they live in.
“A buyer’s market could develop in ZIP Codes with heavy exposure to such borrowers,” said American Enterprise Institute Housing Center Director Edward Pinto and research fellow Tobias Peter.
So which metro area markets are most at risk?
- Atlanta, GA
- Houston, TX
- Chicago, IL
- Dallas, TX
- Washington, D.C.
- Baltimore, MD
- Riverside, CA
- San Antonio, TX
- Fort Worth, TX
- Philadelphia, PA
The U.S. housing shortage that began before the pandemic will be around for ‘years to come’
The housing shortage that began before the pandemic will stick around for a long time as market demand soars, the chief executive of home builder Taylor Morrison told CNBC on Wednesday.
“As the economy continues to improve, we’re going to see mortgage rates move up, and I think that should be expected. They’re not going to stay under 3% forever,” CEO Sheryl Palmer said. She adds, “the lack of supply and the overwhelming demand is something that will be with us for years to come.”
Earlier Wednesday, the Mortgage Bankers Association’s seasonally adjusted index showed that mortgage demand decreased for the second week in a row this week, dropping by 1.8% to their lowest level since the beginning of 2020. Home purchase applications and mortgage applications to refinance a home both dropped for the week, even though mortgage rates dipped.
Despite those developments, Palmer expressed confidence in the “robust housing market” and sustained demand across all areas and consumer types.
Growth in housing inventory has slowed over the past decade in the aftermath of the 2008 housing crisis, creating an “underbuilding gap” of 5.5 million to 6.8 million housing units across the country since 2001, according to a recent report from the National Association of Realtors.
“Additional inventory is the solution to all that ails us at this moment,” Coldwell Banker CEO Ryan Gorman told CNBC last week.
Weekly Mortgage Rate Update
Mortgage rates decreased this week following the dip in U.S. Treasury yields. While mortgage rates tend to follow Treasury yields closely, other factors can be impactful such as the labor markets, which are continuing to improve per last week’s jobs report. We expect economic growth to gradually drive interest rates higher, but homebuyers and refinance borrowers still have an opportunity to take advantage of 30-year rates that are expected to continue to hover around three percent.
The Freddie Mac weekly survey shows the average rate for a 30-year fixed mortgage is 2.9%, which is 0.08 points lower than last week, and down 0.13 points from this time last year.