March 30, 2020
The month of March has not been kind to our industry. In fact, 2020 has been rough, first with unequaled lock volumes flooding everyone’s business’s, and now changes happening so rapidly no one can keep track. Orion believes it is critical for our brokers to not only hold the hands of your borrowers, but to be aware of current issues facing us. And to also realize that late last week Ginnie Mae stepped in to help Ginnie issuers like Orion – great news for us!
With our “ear on the telegraph lines,” the much of the industry is grappling with servicing advances (who will pay for them, and for how long), servicing values (they were hit hard by forbearance plans), having loans sold and funded (Orion’s specialty!), and capital markets (liquidity concerns and volatility). Lenders of all shapes and sizes are having to pay expensive margin calls, impacting cash balances.
Other factors impacting our business include shelter in place state limitations. Although most exclude new construction, real estate agents are grappling with changing appraisal guidelines and skeleton staffs at title companies and county recording office. Not only is the industry working on a micro level with underwriting guideline changes and price fluctuations, but also on a huge scale.
For example, on Friday evening (3/27) Orion and Orion’s clients received some good news. Namely, Ginnie Mae announced that it would shortly implement the Pass-Through Assistance Program (PTAP) through which mortgage servicers can request that Ginnie Mae advance principal & interest (P&I) to bondholders on behalf of servicers who have a "shortfall". Borrowing under the PTAP is expected to be a "last resort" financing option to address a liquidity shortage.
While it remains unclear how much this facility will be used by large servicers given the "last resort" language, Orion believes that this is a positive for the mortgage servicing industry and demonstrates that the regulators are very focused on providing financing to mortgage servicers to support the meaningful increase in forbearances and delinquencies that is expected. We continue to think that other servicing advance funding options, most likely by the Federal Reserve, are likely to be implemented in the fairly near future. Servicing values have also been helped by the news.
Orion’s operation staff has really risen to the task at hand. Whether it is eClosings, working from home, increasing our productivity to meet the demands of our brokers, or a high level of professionalism, we’re here to help!