• HOME
  • solutions
    • RECURSION ANALYZERS
    • Mortgage Company Data
    • Recursion DataCloud
    • Customized Solutions
  • BLOG
  • CLIENT LOGIN
    • Recursion Analyzers
  • ABOUT US
    • OVERVIEW
    • OUR TEAM
    • News & Events >
      • Recursion In News
      • Recursion Data Citations
  • CONTACT
RECURSION CO
  • HOME
  • solutions
    • RECURSION ANALYZERS
    • Mortgage Company Data
    • Recursion DataCloud
    • Customized Solutions
  • BLOG
  • CLIENT LOGIN
    • Recursion Analyzers
  • ABOUT US
    • OVERVIEW
    • OUR TEAM
    • News & Events >
      • Recursion In News
      • Recursion Data Citations
  • CONTACT
BLOG

Who Is and Isn’t Getting a Waiver?

11/10/2021

 
As we have noted many times, one of the best features of loan-level analysis is the ability to segment the mortgage market into components that allow for a deepening of understanding of the behavior of the various market players. In this note we look at two groups: borrowers who get an appraisal and those who are eligible to get one but do not.

In previous posts we pointed out that analysis of the performance characteristics of mortgages with and without appraisal waivers cannot be accomplished by looking at loans with waives vs those without as many loans without waives are ineligible to obtain them. A robust analysis can only be conducted by looking at loans with waivers against loans that are qualified to get one. The qualification characteristics can be complex, but the main factor is LTV, which differs by loan purpose.[1]
​

The question that naturally arises is why do some eligible borrowers not obtain a waiver when doing so would save money on the transaction? To address this issue, we look at the distribution of loan sizes for purchase loans with waivers vs those without them that are eligible. Here is the pattern of loans delivered to the GSEs YTD October 2021 by Agency:
Picture
Run Underlying Query
​There is a clear pattern for the size distribution of eligible loans without waivers to be weighted towards smaller sizes, while large sizes comprise a bigger share of the distribution for mortgages with waivers. It turns out that this holds over time and is consistent between the two agencies.
Picture
Run Underlying Query
​The next and harder question is what drives this pattern? It all comes down to supply and demand. One way to think about this is to look at a breakdown of the categories utilized above by credit score for 2021 YTD.
Picture
Run Underlying Query
The credit scores for eligible loans that do not have waivers is modestly upward sloping in loan size, and are very similar across the two Enterprises, while the same curves are very flat for loans with waivers. The rather large gap between the Fannie Mae and Freddie Mac curves for loans with waivers likely reflects differences between the two programs.
​
These observations would indicate that the use of a waiver among eligible borrowers is more likely a demand side consideration rather than an allocation decision by lenders. Why would anyone turn down a waiver if one were offered as it would reduce transaction costs? It can only be that the information provided by a waiver is valuable, and it appears that this this is more the case for lower income borrowers looking for leverage in their negotiations with the seller than it is in more upscale markets, particularly in a time of rapidly rising house prices.

[1] https://www.recursionco.com/blog/peering-deeper-into-piw-performance

    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    May 2019
    March 2019
    February 2019

    Tags

    All
    Affordability
    ARM
    Bank\Nonbank
    Borrower Assistant Plan
    Cash Window
    Climate Change
    CMBS
    CMO
    Conforming Loan
    Conventional Loan
    COVID 19
    CPR\CDR\CRR\CCR
    Credit Score\DTI\LTV
    CRT\CAS\STACR
    Delinquency
    Early Buyout
    Early Payment Default
    ESG
    ET Pools
    Fannie Mae
    Fed
    FHA
    FHFA
    Forbearance
    Foreclosure
    Foreign Investor
    Freddie Mac
    Ginnie Mae
    Green Loans
    HECM
    HELOC
    HMDA
    HUD
    LMI
    Manufactured Housing
    Modified Loans
    MSR
    Multifamily
    Occupancy Type\NOO
    Partial Claim
    Payoff
    PIW
    Prepayment
    Purchase Loans
    Recursion In News
    Refi Loans
    Reperforming
    RG Pools
    Rural Housing
    Single Family
    Special Eligibility Program
    TBA Market
    TIC
    TPO
    UMBS
    US Treasury
    VA

RECURSION

SOLUTIONS ​
Recursion Analyzers
​
Mortgage Company Data
Recursion DataCloud
Customized Solutions


ABOUT US  ​
Overview
​Our team
CLIENT LOGIN   ​
Recursion Analyzers

CONTACT

224 West 30th St., Suite 303, New York, NY 10001
Contact Us

Picture
Copyright © 2022 Recursion, Co. All rights reserved.​
  • HOME
  • solutions
    • RECURSION ANALYZERS
    • Mortgage Company Data
    • Recursion DataCloud
    • Customized Solutions
  • BLOG
  • CLIENT LOGIN
    • Recursion Analyzers
  • ABOUT US
    • OVERVIEW
    • OUR TEAM
    • News & Events >
      • Recursion In News
      • Recursion Data Citations
  • CONTACT