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According to a report by The S&P CoreLogic Case Shiller Index, the leading measure of U.S. housing prices, there has been an increase in annual home prices by 10.4%.
And the reports say that about two-thirds of the people who bought a home in 2020 made an offer only on video tours.
Leading to concerns that an over-exuberant housing market could be threatened by credit risks, unrealistic valuations, rising interest rates, and other problems.
According to recent data from the Mortgage Bankers Association, due to the COVID-19 pandemic close to 2.6 million homeowners have lost their jobs and are currently enrolled in the forbearance program.
There are significant differences between the U.S. housing market today and the financial crisis of 2007-09.
Because the mortgage products today are significantly more conservative, compared to the no-income verification, and low down-payment loans that happened then, the modern-day mortgages follow strict underwriting guidelines.
In the 2020 fourth quarter, the total home equity in the U.S. housing market rose by $1.5 trillion, up 16.2% from 2019, for an average gain per homeowner of $26,300.
The banking system has tightened capital requirements compared to the financial crisis, during 2020 the Tier 1 capital ratio of all American banks averaged more than 14%.
Here’s what to worry about
Because of our extensive workload, quality control should be paid attention to.
During a post-close quality review, it has been observed that there is an increasing number of errors in the application, documentation, and approval process on thousands of loans in the past year, when rates were historically low and applications flowed in abundance.
These errors could be because of the speed at which originators are processing loans, to capitalize on the refinance opportunity.
Created by record-low interest rates. Also, the tenure of loan underwriting personnel could be the reason because over 30% of mortgage underwriters have been in this position for two years or less.
Reference Source: Market Watch
