Speaking at this week’s virtual 2020 National Property Preservation Conference, Jacob Williamson, VP for Single-Family Collateral Risk Management at Fannie Mae, offered insight into how the housing finance company has managed property preservation amid the COVID-19 pandemic.
When COVID-19 shelter-in-place protocols were introduced this year, vendors and servicers maintaining properties faced major challenges.
“We've observed a tremendous response by our property preservation vendors and our servicing partners to keep property preservation activities going and to keep performance meeting expectations despite these challenges,” Williamson said.
Although the pandemic has created many hurdles, it has also spurred Fannie Mae to evaluate new and creative solutions to meet challenges brought on by COVID-19. Many participants in the mortgage and housing industries, including Fannie Mae, have had to adapt and adopt more technology at a faster pace.
“Although Fannie Mae had been testing and learning different concepts when it comes to valuation modernization, COVID-19 really accelerated the reliance and improvement on tools such as mobile technology, 3D scans, and occupant assisted inspections,” Williamson said. “With the launch of the temporary appraisal flexibilities in response to COVID-19, the appraiser could leverage other third-party data sources including conducting a FaceTime or Zoom call with the homeowner to virtually walk through a property, as an example. These temporary appraisal flexibilities are still being offered today, and we're seeing appraisal quality comparable to that of traditional appraisals.”
In addition to speaking about how the mortgage finance industry has taken advantage of new technology in the wake of COVID-19, Williamson also examined the pandemic’s impact on delinquency numbers and loans in forbearance. Fannie Mae has been “keenly focused on helping homeowners who have been impacted by the COVID-19 pandemic,” he said.
“Overall forbearance take-up rates continue to decrease,” Williamson said. “And we’ve already observed some of our forbearance initiations exit in a positive way such as through a reinstatement or a payment deferral.”
While delinquencies have risen during the pandemic, they have not reached the same level as that of the prior financial crisis.
“When observers compare this current pandemic crisis to that of the global financial crisis in 2008, the delinquency levels from a rate and volume perspective have not reached the peak of that previous crisis,” Williamson says.
Despite the decrease in forbearance take-up rates and early forbearance exits entering reinstatement and payment deferrals, Williamson noted that this doesn’t mean that all of the work is done.
“It's still very early in this pandemic crisis, and we still have a lot of homeowners who need assistance and who are still active on forbearance plans,” Williamson said.
Meanwhile, a moratorium on foreclosures may have reduced the influx of new properties into Fannie Mae’s real estate owned (REO) portfolio, but the mortgage finance company continues to innovate and refine processes related to REO. Some of these improvements are focused on the process of rehabbing distressed properties.
“What I am particularly proud of in our REO retail channel is how far we have been able to take the repair strategy in partnership with our local real estate agents and repair contractors,” said Williamson. “In recent dispositions and – going back some three years -- we have seen our repair investments increase tremendously. The complexity of these rehab jobs has grown to match that spend.”
Even amid the pandemic, Fannie Mae’s repair strategy has continued to progress.
“Our repair strategy has evolved to include a broader commitment to energy efficiency and water conservation,” said Williamson. “We have installed numerous properties with learning thermostats, Energy Star rated appliances and water heaters, LED lightbulbs, and low flow toilets and showerheads.”
While the pandemic has added hurdles, Fannie Mae has not slowed in its efforts to innovate and improve processes. As Williamson sees it, Fannie Mae is “truly renovating poor condition properties and transitioning them into the hands of owner-occupants.”