October Research produced a free Economic and Regulatory Outlook webinar for audiences looking to learn what lies in store for the industry in 2021.
Ted Jones, chief economist and senior vice president at Stewart Title, and Andy Dunn, manager of regulatory compliance analysis at Wolters Kluwer, were joined by moderator Max Lamb, director of business development at Qualia, to discuss what they thought may happen in the coming year.
In recapping the economic journey of 2020, Jones said the country was in a recession for the first two quarters but has been out since July. A recession, he said, is defined as two or more quarters of negative growth for the gross domestic product (GDP).
Goldman Sachs estimated 2020 would end with -4.6 percent growth for the GDP, which given the unprecedented events of the year, Jones said is “a miracle.”
“If I had told you in March our GDP was only going to be down 4.6 percent, you’d have said I’m nuts,” he said. “Next year, they’re forecasting a 5.3 percent gain, so we’re turning the corner rather nicely.
“Now, could we have a double-dip recession? You bet.”
Want more information? Check out the webinar on demand.
Jones emphasized how low current interest rates are by telling a personal story. When closing on a house in Texas with his wife in November 1989, he said they had been thrilled at their interest rate: 9.75 percent, the first time in a decade the interest rates had been below 10 percent.
Today’s interest rates are nowhere near that high. Jones said interest rates (around 2.7 percent) are forecasted to stay low in 2021. The exact percentage, he said, depends on whose forecast you consider. On the one hand, Fannie Mae predicts interest rates to be 2.8 percent for 30-year fixed-rate conventional loans, while the Mortgage Bankers Association (MBA) foresees 3.3 percent.
“[Those differences] just epitomizes the U.S. economy right now,” Jones said. “The uncertainty that we have. We just don’t know. It’s pretty amazing.”
Dunn spoke about possible regulatory changes in store for the industry this year. He started with the SECURE Notarization Act of 2020, which would authorize and establish standards for electronic and remote notarization that occur in or effect interstate commerce. The bill was introduced in late March.
“What’s interesting is, no action has been taken on [these bills] since they were introduced,” Dunn said. “…No action means no progress. It is unlikely we’re going to see anything move forward in this session of Congress, and we’ll see what happens next, in large part due to the state level response.”
Dunn also discussed the future of eClosings. Dunn said the good news about electronic and remote transactions is the consumer experiences have been very positive.
“The consumers are still in control,” he said. “While we need the underpinnings of the law and the regulation to help move forward, ultimately, why did we see this explosion in interest and demand for doing things electronically? It wasn’t, unfortunately, due to the availability of technology. It was all a result of the pandemic and the response and the need to innovate and continue to get the job done.”
Dunn then covered the moratorium on foreclosures and the forbearance programs currently being offered to consumers who have been struggling with the pandemic and whether it may lead to a spike in foreclosures down the line. Dunn responded with the infamous lawyer answer to most questions: it depends.
Dunn finished his overlook with thoughts on what could be expected for consumer protection laws. Issues on this front are less pandemic related and are more perennial. He said though the advantage of digitizing the industry is flexibility, there is also a challenge in upkeeping privacy and cybersecurity standards.
“You can’t have the convenience without the responsibility,” he said.
Jones and Dunn then answered questions, including:
- What does Jones think about the lending environment for residential sales and prices? What about the commercial?
- What are Jones’ thoughts on the job market and the energy industry? What are signals that can be drawn from those sectors and how it factors into the real estate market?
- What kind of ramifications or effects will the incoming administration have on the economic and regulatory sides of the industry?
- What role would a national RON and/or RIN law play if most or all of the states have their own regulations in place?
- Taking into consideration of international laws, such as EU’s GDPR laws, how do those that impact the regulatory environment in the U.S.?
- What is their view on the threat the digitizing of the entire closing process poses to traditional brick-and-mortar, independent title agents?
Want to hear more about what these experts said about the economic and regulatory outlook for the coming year? Check out the webinar, now available on demand, for more information.