Free property fraud alert service for Lee and Collier County | Keith Cloak posted on the topic | LinkedIn (2024)

The delinquency rate of first-lien mortgages currently stands at 3.09% and is showing signs of continuing to decline. This serves as a strong indicator of a thriving housing market, bolstered by the limited availability of existing homes for sale. It comes as no surprise that we are witnessing historically low delinquency rates in this environment. Looking back to 2010, the Federal Reserve's Quantitative Easing (QE) policy allowed homebuyers to stretch their budgets due to historically low interest rates. However, the tides have turned in 2021, as the Fed aggressively implemented Quantitative Tightening (QT), resulting in interest rates soaring to levels not seen in 40 years. While both policies present challenges, it is highly likely that QT will lead to a future spike in the delinquency of first-lien mortgages.

So, your buyers are still on the sidelines with 6-7% interest rates, thinking that house prices will begin to drop? It's not possible, and here’s why! The total supply of single-family houses in the U.S. grows about half as fast as the total supply of gold in the world. Today, a record of just under 40% of homeowners are mortgage-free, and of those that do have a mortgage, 50% are below a 4% interest rate. Waiting on the sidelines for lower interest rates has proven to be a flawed strategy.

Did you Know?What’s more important in a property appraisal, hitting value or a low SSR score?Of course, we all rejoice when the property we list or sell gains sale value. However, a low SSR score will likely trigger a desk review appraisal, and no one wants a desk review, especially if it could disrupt the transaction. So, what to look for?Every property appraisal is returned to the ordering lender with an addendum called the (Submission Summary Report (SSR).) indicating the assigned SSR score. This score ranges from 1.0 to 5.0 with 1.0 being the best score indicating the lowest collateral risk to 5.0 the highest risk. On average lenders are troubled by an SSR of 3 or greater and will order a desk review. Don’t get caught short! It's highly recommended that you ask your loan officer to report the appraised value and, as importantly, the SSR score. Submission Summary Report (SSR).Appraisals conducted for conventional loans are uploaded to an industry-wide Uniform Collateral Data Portal (UCDP). Here, the appraisal report is assigned a rating known as the Submission Summary Report (SSR). This SSR score, ranging from 1.0 to 5.0, serves as a benchmark for the appraisal's quality and accuracy, triggering further appraisal reviews if necessary.For more information on SSR scores contact your In-house Fidelity Direct Mortgage Team:

An inevitable snapback: A term used in economics to describe a rapid recovery or rebound after a period of decline. In the context of the real estate market, this refers to a potential surge in existing home sales after a prolonged period of stagnation. Too Slow for Too Long!Four million existing homes were sold in 2023, a figure that is 21% below its pre-pandemic average (5.1 million) and on par with 2008 levels. This alone suggests a potential for a significant rebound in sales. However, it's crucial to note that the US population has grown by 40 million over the same period. This means that on a per-population basis, existing home sales were shockingly low last year, a situation that is clearly unsustainable. [Source: NAR]Herbert Stein’s Law: if something cannot go on forever, it will stop.

Naples!

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Is this impossible? If Yun is correct and home sales can't remain this low, something more than population growth must lead them forward. Could it be interest rate cuts? Potentially, but more impactfully than we might hope. The housing market is grappling with challenges, with supply being a major issue, followed by property taxes and insurance. The number of homes under construction needs to be increased to help reduce the cost of homes. Today's interest rates are historically low for all the costs of home ownership. Oh yes, those who remember the quantitative easing period when interest rates were 2% will disagree; however, today, with no government intervention, interest rates are more in line with our current economic conditions. Everyone wants a lower interest rate and a 5+ % yield on their money market funds. However, no one wants to deal with the effect of a lower interest rate, which is the catalyst for higher home prices and lower yields, especially in an environment with already low inventories and near all-time high home prices. Remember, be careful about what you wish for should interest rates fall back into the 5% range. The costs associated with a new home will expand to new all-time highs. So, those whose retention of history dates to what they ate for breakfast this morning will soon find the pause has ended for lower rent and flat home prices. It's inevitable!