Mortgage Industry: Direction 2010
Mortgage industry experts reflect on the year that was and weigh in on what’s to come.
01.28.2010 – What’s ahead for an industry that faced the most tumultuous year in its history? How did it get to this point and what is the future outlook? Xerox Mortgage Services held a “State of the Industry” roundtable discussion with mortgage experts* to tackle these important questions. Here’s a look at what attendees had to say:
Question: Do we need more regulations or do we need to better enforce the regulations we already have?
Answers from the experts: Future success rests on going back to the basics. Current mortgage regulations really aren’t addressing the issue. Banks need to grant responsible loans and consumers also need to make smart financial decisions.
According to A.R. Miller Smith, president and COO, American Home Bank, many consumers don’t understand the product they are buying into and the disclosures aren’t clear to them. This falls back on the mortgage industry to take responsibility and make conditions crystal clear to the buyer – right down to ensuring they understand it is about making payments every month and not taking on additional obligations.
Question: What are the top concerns for lenders this year?
Answers from the experts: Fluctuating loan rates result in unpredictable sales and uncertainty in the market keep viability and profitability top of mind for lenders today. Concerns around compliance are also heightened as rising costs force lenders to find new ways to manage risk. Staff education is a must is to ensure they are abiding by all rules and regulations when it comes to loan processing.
In addition, regulation deadlines seem daunting and unattainable for lenders and brokers. Industry experts must work directly with regulators to implement realistic compliance deadlines and discuss the impact of changes on the entire community.
Question: What will it take to right the industry?
Answers from the experts: Unemployment has to improve. No matter how low interest rates are, people without jobs cannot pay their mortgages and they certainly cannot take out additional loans.
Improvements will also be made when bankers start to produce viable loans. Without viable loans, it’s difficult for independent mortgage bankers and brokers to make a profit on an asset that is decreasing month by month. It’s a cyclical business. If houses aren’t being sold and builders aren’t building, then loans aren’t being distributed and banks aren’t earning profits.
Question: Loan volumes are the lifeblood of the industry. What will the environment be like in 2010?
Answers from the experts: Some experts anticipate a substantial increase in interest rates which will cause loan volumes to decrease. However, others feel that rates will stay low as long as the government can hold them there and until other signs of economic recovery such as jobs and credit quality improve.
“Our country and our history have been built on Americans buying homes so that will not go away,” noted Miller Smith. “We’ll see first time home buyers in the market and we’ll see ourselves return to a purchase market with fewer refinances.”
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* Roundtable attendees included Greg Smith and Todd Moncrief, Xerox Mortgage Services; John Featherman and A.R. Miller Smith, American Home Bank; Tony Stasiek, Scotsman Guide; Gabe Minton, Motivity; Roger Gudobba, CSI; Rick Grant, Rick Grant & Associates; Kim Weaver, Fiserv; Scott Cooley, Cooley Consulting; Janet Hewitt, Mortgage Banking magazine and Kathy Stout, Colorado Capital.
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- Xerox and mortgage industry experts weigh in on what’s to come in 2010.
- News Facts
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- 1. The Mortgage Bankers Association announced that it expects mortgage originations to reach $1.25 trillion in 2010. Modest increases in home sales will be the primary driver but refinance originations are expected to decline as mortgage rates rise.
- 2. This decade brought initial forms of electronic document collaboration, the next decade will require a new, and much more sophisticated form of intelligent partnerships in order for companies to succeed.
- Resource Links
- AUDIO: Listen to the entire roundtable here.
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