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A break from consistently gloomy housing news – record foreclosures, a toppling in average home prices by more than 32% in three years – has emerged in the past few weeks from government and industry measures revealing upbeat sales and price reports. Still, a swift rebound in the worst housing market since the Great Depression is not on the horizon, many industry analysts say.
A big factor is that unemployment remains at a near 26-year high and headed toward 10%, and many prospective home buyers are staying out of the market as a result. Where that tops out will be a big factor in determining whether the record pool of foreclosure properties grows.
For now, many mortgage servicers are focusing on pre-collection work to keep borrowers out of default - and to keep defaults from becoming foreclosures. As a result, more coordination will be needed across the default management cycle, Elizabeth A. Jordan, senior manager in the risk strategy practice at consulting firm Deloitte & Touche, based in Charlotte, N.C., tells CCR Newsline. "Lenders are already adjusting for this."
To manage the work, more servicers are using predictive analytics - software programs to help identify borrowers who are most likely to stay current.
Adds Jonathan Corr, chief strategy officer at Ellie Mae, a mortgage software provider based in Pleasanton, Calif., "Most folks are hopeful, based on all the numbers we've been seeing, that we've got a floor here and we're going to start seeing a long, slow recovery. We can't march around in victory yet, but we're starting to see the light at the end of the tunnel."
According to the Mortgage Bankers Association, last week saw a decline in 30-year fixed mortgage rates to a three-week low - fueling demand for home loans and refinancing. Average 30-year mortgage rates fell to 5.17% in the week ended July 31, the lowest since 5.05% in the July 10 week. That drop in borrowing costs pushed refinance applications up 7.2% to 1,996.7 last week, compared to the previous week, based on the industry group's seasonally adjusted indexes.
