Veros Real Estate Solutions, released its 2022 Q4 VeroFORECAST that anticipates home prices will turn negative overall and depreciate on average by -0.5% for the next 12 months, a significant drop from the 1.5% annual appreciation forecast just one quarter ago. “This decrease to an average depreciation of -0.5% over the next 12 months is the first time in over a decade that Veros’ average house price forecast has gone negative,” said Eric Fox, Chief Economist with Veros. “The last time that the annual forecast was expected to be negative was in 2012 following the aftermath of the previous housing market crash. Though average depreciation is expected now, the fundamentals of the U.S. housing market in 2023 are much better than they were a decade ago. This is not going to be a repeat of what we saw in 2007-2008.” Markets expected to have annual depreciation have grown from a few dozen during last quarter’s update to nearly half of the markets in this update. Though the number of depreciating markets may seem large, many of them are forecast to have only mild depreciation of just a percent or two. The 10 strongest performing markets in the country forecast over the next 12 months are only forecast to appreciate at the 4% to 6% level which is down significantly from what the top performing markets were expected to do just a year or two ago. The 10 least performing markets over the next 12 months had the most notable changes. In last quarter’s forecast, there were 10 markets forecast to depreciate in the lower single digits. However, now all of these 10 markets are forecast to depreciate in the mid-single digits. Source: Veros Real Estate Solutions

The Federal Housing Finance Agency (FHFA) isn’t doing all that it can to prevent appraisal bias, according to the agency’s Office of Inspector General. In a report issued recently, the watchdog said the regulator of Fannie Mae and Freddie Mac, which itself published a report that drew attention to racial bias claims in December 2021, should notify state regulators and licensing authorities when it finds cases of appraisal bias. It should also alert regulators and licensing authorities when it files complaints against appraisals, the OIG said. The OIG found that the FHFA in 2022 made 17 referrals and provided 25.6 million active appraisal records to the U.S. Department of Housing and Urban Development (HUD), but did not take further action. “The Associate Director of FHFA’s Office of Fair Lending Oversight informed us that the Agency does not file complaints with the state licensing authorities and has no policy in place on the subject,” the report said. The OIG also said that while the FHFA identified appraisals that made overt references to prohibited bases like race or color in certain appraisal reports it reviewed, the “FHFA has not determined the extent to which the Enterprises are using appraisals that improperly consider bases that are prohibited by federal fair lending law.” The FHFA agreed to properly file complaints with state regulatory agencies for each appraisal specified in the December 2021 review. It also recommended that the FHFA coordinate with Fannie Mae and Freddie Mac to determine which appraisals have detected bias. The new policies are to be in place by May of 2023. Source: HousingWire

The Office of the Comptroller of the Currency (OCC) reported that the performance of first-lien mortgages in the federal banking system improved during Q3 of 2022. The OCC Mortgage Metrics Report, Third Quarter 2022 showed that 97.2% of mortgages included in the report were current and performing at the end of the quarter, compared to 95.6% a year earlier. This latest report from the OCC presents performance data for the third quarter of 2022 for loans that the reporting banks own or service for others as a fee-based business. The data collected reflects a portion of first-lien residential mortgages in the country. The characteristics of the loans included here may differ from the overall population. The loans included are not a statistically representative, random sample. The report excludes junior liens, home equity lines of credit, and home equity conversion mortgages (reverse mortgages). For loans in forbearance covered by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, reporting banks are following guidance from the U.S. Department of Housing and Urban Development (HUD), Federal Housing Finance Administration (FHFA), and the respective government agencies and government-sponsored entities for the calculation and reporting of delinquency and credit bureau reporting. The percentage of seriously delinquent mortgages, defined as mortgages 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due, was 1.3% in Q3 of 2022, compared to 1.5% in the prior quarter, and 3.1% year-over-year. Nationwide, mortgage servicers initiated 9,835 new foreclosures in Q3 of 2022, a decrease from the prior quarter, but a higher volume than a year earlier. The new foreclosure volume in Q3 of 2022 was lower than pre-COVID-19 pandemic foreclosure volumes. Source: DSNews

The Consumer Financial Protection Bureau issued its annual report on the industry’s three largest credit reporting companies, based on nearly a half-million complaints it received about TransUnion, Equifax and Experian. The report details improvements and deficiencies in the nationwide consumer reporting companies’ responses to consumer complaints transmitted by the CFPB. It also includes considerations to improve compliance with consumer financial protection laws and to better serve consumers. “TransUnion, Equifax and Experian routinely top the list of complaints submitted by consumers,” said CFPB Director Rohit Chopra. “We will be exploring new rules to ensure that they are following the law, rather than cutting corners to fuel their profit model.” The report, mandated under the Fair Credit Reporting Act, is based on 488,000 consumer complaints the CFPB transmitted to Equifax, Experian, and TransUnion from October 2021 through September 2022. The findings follow last year’s report that detailed “failures by the nationwide companies when responding to consumer complaints” submitted to the CFPB. The report noted Equifax, Experian and TransUnion have since acted to remedy issues identified in last year’s report. Specifically, the CFPB found they have changed how they respond to complaints: Equifax, Experian, and TransUnion use of problematic response types described in last year’s report has declined. Most complaints now receive more substantive responses. In addition, the companies provided more tailored complaint responses: Across all three companies, most responses now describe the outcomes of consumers’ complaints. In September, the nationwide companies provided a tailored response to more than 50% of complaints that were closed with an explanation or relief. Source: The Mortgage Bankers Association

So, what’s in store for the housing market this year? Home prices rose nearly 40% from the spring of 2020 to the spring of 2022, representing roughly a decade of price gains in just a couple of years. Will what went up also come down? Housing experts and economists are not in agreement. Economists’ predictions range from prices rising by around 5% this year, according to Realtor.com, to as much as a 22% decline from the peak in 2022 to the trough, according to John Burns Real Estate Consulting. What happens with inventory, mortgage rates, and the broader economy will likely determine which tack the market takes. “Mortgage rates are really critical to the path of the housing market in the year ahead,” said Jeff Tucker, senior economist at Zillow. “We are watching to see affordability gradually improve. That should breathe some life back into the market.” Another thing he’s keeping an eye on is inventory of homes for sale, which is already almost back up to where it was in 2020, he said. “Yes, things have cooled way down in the housing market, but we don’t have a glut of homes for sale,” said Tucker. “That is the main thing that is buffering us from runaway price declines.” Zillow forecasts that home prices nationally will decline by between 1% and 4% from last June’s levels, the 2022 peak. In 2023, we may see a mirror image of 2022 — a somewhat trying first half that gives way to a surprisingly strong back half of the year for buyers, said Leonard Steinberg, corporate broker at Compass in New York. “The would-be buyers that stepped back from the market in late 2022 can’t and won’t stay away forever, especially given the competing demands from first-time buyers looking to get into the market and retirees looking to move or downsize,” Steinberg said. Chronic under-building of new homes is also likely to remain a challenge across all market segments as builders grapple with the challenge of balancing a short-term decline in demand with the long-term need for more new housing, he added. Source: CNN