DS News

40 HOME MAINTENANCE AND HURRICANES e 2017 hurricane season led to a sharp spike in home maintenance and remodeling activities, according to a Housing Health Report published by BuildFax. e report, which looks at single-family housing authorizations, existing housing maintenance, and existing housing remodeling indicated that while the annual rate of authorizations for single-family housing units picked up the pace in September, the volume for housing maintenance projects and spend increased at progressively larger margins. e report revealed that the pace of home remodeling was leveling out after a few years of steep increases. ese sharp spikes, according to the BuildFax report, are likely a result of the 2017 hurricane season. "Typically, we see dips in maintenance and remodeling activity immediately following a natural disaster, as we saw in Florida following Hurricane Irma, which caused $10 billion in insured losses. Irma's impact on Florida in September 2017 directly contributed to last month's 5.06 percent increase in maintenance activity," said Jonathan Kanarek, COO, BuildFax. e trend also indicates continued improvements to the health of the supply of the existing home as homeowners look to maintain their properties instead of investing in new ones, the report revealed. e annual rate of housing volume maintenance increased by 5.06 percent in September and the year- over-year spend on housing maintenance surged 18.14 percent from September 2017. On the other hand, the report revealed that the annual rate of housing remodeling volume increased by 2.39 percent in September. Year over year the spend on remodeling increased at a rate of 15.96 percent. For new housing supply, the report revealed that single-family housing authorizations increased at a seasonally adjusted rate of 3.20 percent month over month. On an annual basis, it increased by 10.91 percent over September 2017. e data also revealed a correlation between the spike in remodeling and maintenance activities in Harris County which was affected by Hurricane Harvey last year. "Hurricane Harvey is a different story. Harris County's non-traditional permitting strategies spiked maintenance activity shortly after landfall. is will likely impact remodeling and maintenance activity well into 2019 and we'll be tracking these trends in depth over time," Kanarek said. e reported spike, according to BuildFax was due to authorities in Houston's Harris County traveling to affected areas and flagging properties that suffered damage due to the storm. "is process was implemented to designate impacted properties as eligible for FEMA funding," the report said. "Harris County flagged tens of thousands of properties in September and October 2017, which manifested as a drastic spike in maintenance and remodeling activity." MOODY'S RATES WELLS FARGO'S FIRST RMBS IN 10 YEARS Rating agency Moody's Investor Services assigned a provisional rating to the 24 classes of Wells Fargo's first residential mortgage- backed securities (RMBS). e bank re-entered the RMBS market after a decade with the Wells Fargo Mortgage Backed Securities 2018-1 Trust ("WFMBS 2018-1"). e WFMBS 2018-1 transaction consists of the securitization of 660 primarily 30- year, fixed rate, prime residential mortgage loans with an unpaid principal balance of approximately $441 million, Moody's indicated. Giving the securitizations a rating range from (P)Aaa (sf ) to (P)Ba1 (sf ), Moody's said, "e pool has strong credit quality and consists of borrowers with high FICO scores, significant equity in their properties, and liquid cash reserves. e pool has clean pay history and is seasoned for almost 18 months." According to Moody's, the mortgage loans for this transaction are originated by Wells Fargo Bank in accordance with the nonconforming underwriting guidelines. All of the loans are designated as qualified mortgages (QMs) under the QM safe harbor rules, the rating agency said. Speaking to DS News, a spokesperson for Wells Fargo said that the offering would include recently originated nonconforming, prime loans that were "consistent with those we have been putting on our balance sheet for the past several years." e rating also gave insights into how Wells Fargo planned to service the loans. It indicated that the bank would be the master servicer for this transaction. Wells Fargo will service all the loans and will also be the master servicer for the transaction, who will be primarily responsible for funding certain services advances and delinquent scheduled interest and principal payments for the mortgage loans, unless they determined that such amounts would not be recoverable. "In the event a servicer event of default has occurred and the Trustee terminates the servicer as a result thereof, the master servicer shall fund any advances that would otherwise be required to be made by the terminated servicer (to the extent the terminated Servicer has failed to fund such advances until such time as a successor servicer is appointed and commences servicing the mortgage loans," Moody's said. "e master servicer and servicer will be entitled to be reimbursed for any such monthly advances from future payments and collections (including insurance and liquidation proceeds) with respect to those mortgage loans." e bank couldn't have picked a better time to enter this market with the issuance of private-label RMBS hitting a postcrisis high of $75 billion in 2018, according to a recent Bloomberg report, due to heavy investor demand for nonqualified mortgage transactions. Wells Fargo had been one of the top RMBS lenders before the crisis with more than $1 trillion worth of mortgages sold in 2005 and 2006, the report said.

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