Many feel that counterparty considerations will rise in 2014, as the Dodd-Frank mandated legislation is about 50% complete. In a recent survey, conducted January 13-17, Secure Settlements, Inc looked at lawyers, notaries, escrow agents and title agents to examine the status of closing professionals in the increasing regulatory environment. SSI is seeking support for its mortgage industry pre-funding quality assurance risk management tools, this data helps provide that support. In the new realm of Qualified Mortgage, data pertaining to personal experiences in the closing process is an essential element to understanding risk, both from a consumer and enterprise standpoint. Major points from this survey include
-Nearly 45% of all business is being referred by real estate agents – showing an increase of 27% from last year
-Only 15% is coming from loan officers as opposed to 36% last year.
These numbers reflect a movement away from the refinance market to a market more directly linked to the real estate industry and purchase market.
-A rise in the cost of E & O and surety bonds are troubling many agents. Upwards of 60% of agents are dissatisfied with their current coverage.
This could be a reflection of the insurance market’s growing concern over historical losses surrounding escrow and closing fraud. Some insurers have recently exited the market causing an increase in costs.
-Almost 20% of the people polled reported witnessing fraud at a closing in last year – this was a 16% increase from 2012.
-36% were asked to commit fraud, yet refused to do so. This was up 3% from the previous year.
In other news, purchases of new homes in the U.S. fell more than expected in December – ending the industry’s best year since 2008. Agency MBS prices worsened almost .250 and the 10 year closed at 2.77%, in spite of continued Fed purchase volume and slowing housing news.
Partially due to weak manufacturing numbers from China, rates improved last week – the 10-year closed at a yield of 2.74%. This week will supply the first peak at Q4 GDP (Thursday) and Chicago PMI and Personal Income (Friday). New Home Sales, Durable Orders, Pending Home Sales, Personal Income, Core PCE inflation and Chicago PMI manufacturing and Treasury auctions are also expected. However, one of the most significant reports will be Thursday’s release of the 4th quarter GPD. This Gross Domestic Product is the broadest measure of US economic growth.
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