Q3 Financial Regulation Recap: Mortgage Delinquencies, Reverse Mortgages, and more.

Q3 Financial Regulations

College football has returned and the demand for financial agility has risen yet again — both sure signs that the end of 2018 Q3 is here. But before we look to Q4, here are the highlights, insights, and essentials from the past financial quarter that will affect the trends through the end of the year.

Q3 Financial Regulations Recap

Good news: Mortgage delinquencies fell in Q2.

Thanks to the lessening impact of the 2017 hurricanes on the financial sector, the overall delinquency rate, particularly for conventional loans, has dramatically decreased and is at its lowest level since Q2 of 1987 according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. With the gross domestic product growing at a rate just over four percent, a low unemployment rate, and a job growth rate that’s averaging more than 200,000 new jobs per month, the economy is reaching full-employment, which has a positive impact on mortgage delinquencies. With factors such as the California wildfires and the 2018 hurricane season, the MBA will continue to monitor the market and adjust the loans and changing credit accordingly.

Bad news: Certain reverse mortgages may require a second appraisal.

As September came to a close, the Federal Housing Administration (FHA) announced that it would require second property appraisals under some circumstances for lenders originating new Home Equity Conversion Mortgages (HECMs), which are also more commonly known as reverse mortgages, to target and repair inflated property valuations.

Going into effect on October 1, 2018, through September 30, 2019, the FHA will regularly assess these requirements and their necessity and may decide to renew the requirements for 2019-2020, as well as provide risk assessment appraisals as needed. Aiming to reduce risks in the FHA’s Mutual Mortgage Insurance Fund, this requirement is designed to more effectively determine a property’s true value and condition.

Want to ensure your financial institution is covered when it comes to these tricky second appraisals? Consider working with an AMC.

Agility is the key to winning in the digital era, according to Deloitte.

There’s no question about it: Newer, faster, more advanced business models are taking over the financial sector, and there’s no avoiding the technological factors that are rapidly changing markets across the board — especially in the real estate market. In Deloitte’s 2019 Commercial Real Estate Industry Outlook, the Big Four company dives into the essential factors that will determine agility in the market, from cyber risk management and global capital flows to ecosystem influencers and proptechs. Get the insights to gaining more customers and attracting top talent here.

Want to know how technology is changing appraisals specifically? Check out our guide to the modern technology that will change the appraisal process.

More efficient processes are coming to banks and credit unions trying to stay compliant and competitive.

Just as Q3 wrapped up, financial depository regulators and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) decided to allow banks and credit unions to build collaborative arrangements to satisfy both their Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements. This arrangement will allow banks and credit unions to be more competitive in the market while still maintaining compliance, and also cut costs by allowing shared resources, such as technology and staff. Banks and credit unions aiming to consider an arrangement should consult their primary federal regulator.

Also, commercial real estate is on the rise.

Commercial Real Estate Trends in Q3

Source: rcanalytics.com

Q3 was great for commercial property sales with the overall sales-transactions for high-value commercial properties increasing 2%, and industrial property sales increasing a whopping 17%, over the same period last year. RCA reported that commercial properties valued at 2.5 million and more came in approximately at 118.8 billion late this summer, with industrial property sales coming in at 18.2 billion. Both commercial and industry-related properties, according to data provided by the RCA, are projected to continue to improve well through the end of the year.

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