Archive for Mortgage Commentary

When Will the Refinance Boom End?

By · November 8, 2012 · Filed in Mortgage Commentary, Mortgage Marketing · Comments Off

It’s hardly a secret that the latest refinance boom helped the mortgage industry rebound in 2012. The Federal Reserve committed to low rates for 2 more years and QE3 has kept money flowing into this anemic economy. Certainly record low interest rates certainly have helped stimulate home purchasing, but a majority of the properties bought have been investor-driven. But many home buying prospects remain on the sidelines because they are unable to meet today’s strict home loan guidelines that require higher credit scores and acceptable income documentation.

The HARP 2.0 served up a significant opportunity for refinance activity when Fannie Mae and Freddie Mac removed the LTV restrictions on the Home Affordable Refinance Program. The HARP opportunities have helped this year but the activity for qualified HARP applicants is rapidly dropping because for the most part people that were eligible for HARP 2.0 either refinanced or are in process now. The most significant demand for borrowers in need of refinancing in 2013 is homeowners that do not meet the HARP 2.0 criteria. Will HARP 3.0 arrive any time soon?

Can Home Refinancing Support 2013 Loan Origination?

Credit scores have been increasing for some homeowners so we may see a new wave of eligible borrowers looking to cash in on record low rates. Hopefully the new wave of 620 – 660 fico borrowers will still be employed with income that can be documented for loan purposes. According to NAR, housing starts and property values have increased since last year but, job security remains a major concern going forward. This employment issue may be an obstacle for increased home purchase activity but only time will tell. The negative effects of the Federal Reserve printing “funny money” will make an impact sometime in the near future.

Let’s be honest the “refi-boom” can’t go on forever. Sure 2013 will see more activity as interest rates will remain low. The pool of qualified borrowers has refinanced and refinanced again. Homeowners that didn’t qualify for refinancing in 2011 and 2012 likely won’t qualify in 2013 either. 80% of loans closed in 2012 were refinance transactions. Until private money returns to the mortgage market, there is very little evidence that the refinance activity will continue at its current pace. Is the “refinance boom” coming to an end? Will rising unemployment reduce the pool of qualified borrowers? The unfortunate reality is that there are more unqualified homeowners than qualified ones.

We suggest diversifying your niches to include purchase loan programs in addition to marketing the refinance business that is presently filling your pipeline. If HARP 3.0 does arrive in the coming months then we can reconvene and discuss the emerging opportunities that would extend the current refinance boom through 2014. Until then, try to incorporate more purchase money and develop your “bank of business” for the years to come.


Whisperings of Mortgage Professionals – Mortgage Lead News

Home mortgage rates dropped to record lows last week, but many mortgage brokers and lenders were not cheering. With banks offering more affordable home loan rates than ever before, you would think the professionals selling interest rates and finance opportunities would be more excited. First of all mortgage rates have been ridiculously low for several years. Second, the mortgage guidelines have tightened to the point that not that many loan applicants qualify. Mortgage leads have increased slightly over the last few weeks, but most applicants simply do not qualify.

The new finance reform bill comes down hard on loan professionals for misconduct and fraud. Sure some of the requirements for mortgage lending need to change, but fairness seems to be disappearing from the reform bill. Privately many mortgage brokers are concerned that our government is trying to cap their income. Most of us believe that in America, the land and the free that you should not have your government limiting your income. According to BofA mortgage executive, Jeff Moran, “There seems to be two sets of rules —-One for the conventional mortgages and another set of rules for the government backed home loans.” Moran continued, “With our economy and housing sector in such a fragil state, it is imperative that we make industry changes that protect consumers yet do not hinder genuine home financing opportunities that will help people in our economy get back on their feet.

Is it fair that the government that was involved in pushing risky loans to unqualified borrowers should be dictating how much money we should make? The competitive nature of the mortgage business has been the driving force for new lending products and finance opportunities that have helped this great country expand. The notion that our government is implementing restrictions on our industry yet the government mortgage products are exempt from disciplinary repercussions is maddening.

What can you do? Be vocal and get involved with groups like the Mortgage Bankers Association and local groups like California Association of Mortgage Brokers. There are local mortgage associations in every state, so get involved. Partner with mortgage marketing companies like the Lead Planet who will support you with industry news and internet mortgage leads that will help increase your cash flow. Call 619-600-5720 to get more information on new mortgage lending opportunities and online mortgage lead promotions.