Jan 19, 2019

After laying off thousands of employees last year, Wells Fargo says they'll eliminate more mortgage jobs this year.  The bank announced plans to reduce their workforce by up to 10%, which is a likely 26,000 jobs lost.  They plan to eliminate roles in mortgage operations, branches, and call centers.

In fact, Wells Fargo closed their home mortgage branch in Silverdale in mid-December and transferred the remaining loan officers to Tacoma.  They laid off one employee in Silverdale who had been with the organization for more than 20 years.

Wells Fargo's biggest cuts have come to it's home mortgage division.  The bank axed 5,000 jobs in its mortgage unit including more than 3,300 managers.  They've also eliminated 2.88 branch jobs and 1,500 wholesale mortgage roles.  They've closed 343 branch locations in the last year.  Wells Fargo hasn't announced exactly how many jobs are on the chopping block this year.

In other layoff news...  Mr Cooper, the mortgage company formerly known as Nationstar, will eliminate 109 mortgage employees in California this month.  The layoffs will impact employees in the originations department.

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A study published by BBVA research notes that a sharp decline in affordability, the result of higher mortgage interest rates, caused home sales to decline and prices to slow in the second half of 2018.  While interest rates are to be blamed for the current slowdown, this comes on the heels of years of home prices outpacing income, sometimes to an alarming degree.

Existing home sales peaked in 2017, then decreased for most of 2018.  Increasing mortgage interest rates makes relocating unattractive because homeowners would have to trade a low interest rate on their departure residence for a higher interest rate on their new home.  Therefore many homeowners are staying put and inventory remains low.

"The supply of existing homes for sale will remain suppressed as long as housing construction does not increase in a meaningful way or Baby Boomer homeowners start downsizing.  Baby Boomers, the second largest generational cohort, have still not reached the mid- to late-70s, an age when householders start to downsize in larger numbers.  This lack of supply will continue to support price appreciation, which will keep demand in check."

Buyers also exhibit a greater degree of caution.  Having watched what happened during the last recession, they're wary of buying at the top of the market.  This caution may contribute to weaker home sales in the coming months.

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The Mortgage Bankers Association's Chart of the Week looks at historical mortgage application numbers and forecasts.  "We expect overall origination volume to decline slightly in 2019, but then grow in 2020 and 2021.  Purchase originations are forecast to increase 4% in 2019 and 3% in both 2020 and 2021."

Mortgage Bankers Association Chart of Application Numbers & Forecasts

The MBA notes risks like the US government shutdown, trade wars, Brexit, global economic concerns, and a volatile stock market.  But they expect a solid spring real estate market if interest rates remain (historically) low, inventory grows, and we maintain a strong job market.

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Most buyers' home-buying process should not be impacted by the government shutdown.  As of Monday, 01/07/2019, the IRS reopened for tax transcript orders.  FHA is operating with a shoe-string staff and will not endorse new reverse mortgages.  It's possible certain FHA condo approvals could be delayed.  And there is nobody available at the USDA to guarantee new rural housing loans.  But those aren't typically things we'd run into a lot in Jefferson County, WA.  Most home buyers (and their REALTORS®) won't notice any difference in their home buying experience.

Fannie Mae also released guidelines to allow lenders to close mortgage loans for federal employees who may not be receiving income at the time of closing because of the shutdown.  Fannie also reminded loan servicers that they are permitted, but not required, to suspend credit reporting when home owners affected by the government shutdown have not made their mortgage payments on time.