April’s must-attend event was the Black Knight Information Exchange in Orlando. Not only did I attend but also had the privilege of being on the main stage to introduce a world-class panel of economists (more about this later).
First, some color. The event drew around 1,800 attendees, many of them from the servicing side of our business, although Black Knight’s offerings now extend well beyond servicing solutions and include product and pricing and an array of data and analytics offerings. (And that’s before the much-anticipated deal with ICE Technology closes.)
As you’d expect in the current market environment, the need to control servicing costs and the challenge of keeping up with continually changing compliance rules were two frequent topics of discussion not only in the panels but also in conference rooms and hallway meetings.
For the most part, servicing executives were focused on how to increase overall efficiency and the need to develop loss mitigation solutions that improve current waterfall workflows under the current rules that will be flexible enough to address anticipated changes.
The consensus seemed to be that loss mitigation and default servicing are currently in flux and will continue to be until it is clear what temporary COVID loss mitigation options will become permanent and how they can be applied to help distressed borrowers.
Some of this picture is coming into focus, at least for GSE and government loans. Forbearance, which pre-COVID usually could be offered only as a form of disaster relief, most likely will be a go-to option for GSE and Ginnie Mae loans. But as Laurie Goodman, Institute Fellow at the Housing Policy Council, pointed out in her presentation, this only addresses part of the market. While Fannie Mae and Freddie Mac have the financial strength and direction to make servicers whole for forbearance advances, will private investors be willing and or able to follow their lead?
As the only loss mitigation solution provider fully integrated with Black Knight, my team of Covius account executives had a full dance card of meetings with clients and prospects who wanted to learn more about our integration of our compliance, loss mitigation documents and default title into the Black Knight LMS platform. There was also a great deal of interest in our new default title solution that is delivering results in minutes on more than half our orders.
My 15 minutes of fame—actually, it was more like three minutes—came when I had the privilege of introducing the Economists Super Session on Day 2. The panelists included Laurie Goodman from the Housing Policy Council, Chris Flanagan from Bank of America, Fannie Mae’s Hamilton Fout, Sam Khater from Freddie Mac and Ed Pinto from AEI.
The consensus among the panelists and, for that matter, the attendees, was that high levels of home equity will soften the impact of a recession, if recession comes, and prevent a replay for the mortgage crisis. It will also make home equity the product of choice for the foreseeable future.
The panelists and the attendees I spoke with were cautious about whether the second half of the year would see any uptick in mortgage origination. Most believed that people would buy houses with 6% rates if there are houses to buy, but ongoing inventory constraints make that a big “if.” Rates in the 5% range, most agreed, would begin to move the market again, and this could be the case by year end. Until then, 2023 will continue to be a year of sustained challenges for all of us.