Real Matters Issues Operations Update and Shares Latest Mortgage Market Data

Real Matters Inc. (“Real Matters” or the “Company”) (TSX: REAL), today issued the following statement, providing an update on its operations and sharing the latest mortgage market data:

Today, the Mortgage Bankers Association (“MBA”) announced that mortgage applications were down 17.5% week-over-week, and up 44.7% year-over-year. Purchase applications were down 11.5% week-over-week and down 33.2% year-over-year. Refinance applications were down 19.4% week-over-week and up 143.5% year-over-year.

Week-over-week, Real Matters’ U.S. Title and U.S. Appraisal volumes declined with a noticeable shift to refinance activity. Despite these week-over-week declines, we continue to see stronger volumes than any week in 2019 and more than we received two weeks ago – for both our U.S. Title and Appraisal businesses. As lenders continue to manage the impacts of COVID-19, their underwriting capacity and adjust to a refinance dominant market versus a typical spring purchase market, we may see volatility in the weekly numbers. Real Matters hired 58 new employees in the quarter ended March 31, 2020, and we are continuing to recruit and hire new employees, particularly in our U.S. Title business, to support the near and long-term growth of our business.

Following the creation of government forbearance programs in the U.S., which will provide short-term relief to mortgage borrowers in light of the impacts of the COVID-19 crisis, some media reports emerged highlighting liquidity concerns for non-bank lenders who are also servicers. We concur with recent mortgage industry research that indicates large, non-bank servicers appear to be well capitalized to manage the potential uptake of forbearance programs (even in a severe case).

We do not currently believe that Real Matters’ client volumes will be impacted by these concerns. Our U.S. Appraisal segment client base currently includes one Tier 1 lender and one long-standing Tier 2 lender who are large non-bank servicers. Excluding these two clients, based on our March volumes and discussions with our clients, Real Matters currently receives approximately 2% of its U.S. Appraisal volumes from non-bank lenders who service their own portfolios. In our U.S. Title segment, based on March volumes and discussions with our clients, Real Matters currently receives less than 1% of its volumes from non-bank lenders who have any material servicing operations. Given the composition of our client base, we do not believe that we have significant revenue risk associated with non-bank lenders that are also servicers.

Even if U.S. 10-year Treasury rates increase to 1.0% to 1.2% and remain at those levels for the next couple of years, we believe this will drive 30-year mortgage rates of 3.0% to 3.25% as spreads normalize, creating a large, multi-year market opportunity for Real Matters. Based on those rates and taking into account the near-term impact of COVID-19, we expect robust refinance volumes from a large population of employed and qualified homeowners who stand to save substantially from refinancing, making up for short-term weaknesses in home purchases. We estimate that at least 14.5 million mortgage holders will be incented to refinance and that it would take approximately two to three years to cycle through this volume, taking into account a potential near-term slowdown in lender underwriting capacity due to COVID-19 followed by an annual 20% increase in lender underwriting capacity.

From an operations perspective, our team and field professional networks continues to perform well. Real Matters has a strong balance sheet with more than US$80 million in cash as of December 31, 2019, and we have no debt.

About Real Matters

Real Matters is a leading network management services provider for the mortgage lending and insurance industries. Real Matters’ platform combines its proprietary technology and network management capabilities with tens of thousands of independent qualified field professionals to create an efficient marketplace for the provision of mortgage lending and insurance industry services. Our clients include the majority of the top 100 mortgage lenders in the U.S. and some of the largest insurance companies in North America. We are a leading independent provider of residential real estate appraisals to the mortgage market and a leading independent provider of title and mortgage closing services in the U.S. Established in 2004, Real Matters has offices in Buffalo (NY), Denver (CO), Middletown (RI), and Markham (ON). Real Matters is listed on the Toronto Stock Exchange under the symbol REAL. For more information, visit www.realmatters.com.

FORWARD-LOOKING INFORMATION

This press release contains “forward-looking information” within the meaning of applicable Canadian securities laws. Words such as “could”, “forecast”, “target”, “may”, “will”, “would”, “expect”, “anticipate”, “estimate”, “intend”, “plan”, “seek”, “believe”, “likely” and “predict” and variations of such words and similar expressions are intended to identify such forward-looking information, although not all forward-looking information contains these identifying words.

The forward-looking information in this press release includes statements which reflect the current expectations of management with respect to our business and the industry in which we operate and is based on management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes appropriate and reasonable in the circumstances. The forward-looking information reflects management’s beliefs based on information currently available to management, including information obtained from third party sources, and should not be read as a guarantee of the occurrence or timing of any future events, performance or results.

The forward-looking information in this press release is subject to risks, uncertainties and other factors that are difficult to predict and that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. A comprehensive discussion of the factors which could cause results or events to differ from current expectations can be found in the “Risk Factors” section of our Annual Information Form for the year ended September 30, 2019, which is available on SEDAR at www.sedar.com.

Readers are cautioned not to place undue reliance on the forward-looking information, which reflect our expectations only as of the date of this press release. Except as required by law, we do not undertake to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

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Lyne Beauregard Fisher
Vice President, Investor Relations and Marketing
Real Matters
[email protected]
416.994.5930