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52 MORTGAGE SERVICING: TRENDS AND CHALLENGES Potential homebuyers want more assistance with their buying process, according to a recent TD Bank Mortgage Service Index. e Index notes that homebuyers are optimistic, with 83% saying it's a good time to buy a home and 30% are very or extremely likely to buy a home in the next three years. More homebuyers than ever are using online processes when buying a home. TD Bank states that the number of homeowners who applied for a mortgage online has increased from one in eight (13%) in 2014 to more than one in five (21%) this year. "Digital platforms are speeding up mortgage processing on the front and back ends," said Rick Bechtel, Head of U.S. Residential Lending for TD Bank. "When borrowers leverage online platforms for providing documents and completing necessary forms, we have found it reduces information intake time by more than 60% on average." Many buyers still need guidance in some areas. TD Bank notes that 82% of consumers today believe they have enough resources to educate themselves on the mortgage process, compared to 90% in 2019. Around 30% of homeowners received $2,000 or more in unexpected charges during the homebuying process, with another 42% stating that they are unaware of affordability programs. Additionally, despite the fact that 52% of homeowners plan on staying in their home for less than 10 years, 74% of homeowners took out a 30-year fixed rate or 15-year fixed rate mortgage. While affordability is improving, it is still a problem for homeowners as well as renters in many metro areas. According to Freddie Mac, the largest metro areas are the most rent- burdened. "Rental affordability is a significant challenge for metropolitan areas across the United States," said Steve Guggenmos, VP of Freddie Mac Multifamily Research and Modeling. "e vast majority of the units Freddie Mac finances are affordable. Even so, our research shows that supply just hasn't kept pace with demand in many metros, and that's pushing affordable rents out of reach for millions of American families." AFFORDABLE HOUSING AND THE QM PATCH e Consumer Financial Protection Bureau (CFPB) recently announced that it would be focusing its attention on the Qualified Mortgage (QM) "Patch" for loans that are eligible to be purchased or guaranteed by either Fannie Mae or Freddie Mac. While proponents of the QM Patch say that its expiry in 2021 would make homes less affordable, especially in the lower-tier housing market, an article in Forbes points out that if the Trump administration wants to improve housing affordability, "it needs to expand the role of private markets through increased competition." Writing for Forbes, Norbert Michael, Director of the Center for Data Analysis at e Heritage Foundation, said that the CFPB should announce the patch will expire at its scheduled time in 2021. "en, the Bureau can start working on improving the QM and Appendix Q , rules that are likely holding back private lenders," Michael said. Additionally, he said that the Federal Housing Finance Agency (FHFA) should announce three key areas of change in the way Fannie Mae and Freddie Mac will acquire loans including not acquiring loans related to cash-out refinance, non-cash-out refinance, and loans made to nonowner- occupied homes. On the other hand, FHA can work with other agencies to ensure that it doesn't land up taking those high debt-to- income ratio loans that Fannie and Freddie would be giving up. "Americans would be best served by a vibrant, competitive housing finance market, and they're simply not going to get one unless these agencies move down this path," Michael said. e report comes close on the heels of a recent announcement by the Trump administration that it is putting the final touches on a plan to return Fannie Mae and Freddie Mac into private hands. As reported by the Wall Street Journal (WSJ), the plan is being developed by the Treasury in consultation with the FHFA. e WSJ report stated that "people familiar with the Treasury document cautioned it would likely include substantial changes to the business models of the companies, including steps to reduce over time their footprints in housing finance." e QM Patch has also been one of the key concerns highlighted by current FHFA Director Mark Calabria. DS News recently reported that among Calabria's concerns is the "qualified mortgage patch," which allows more highly leveraged homebuyers to obtain Fannie and Freddie-eligible mortgages. Patch usage has grown in the last few years, and according to Calabria, changing the patch would be a key tool to shrink Fannie and Freddie without a full overhaul, though he stated that he did not intend to do away with it entirely.

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