You’d think our recent experience of the Great Recession’s liquidity crisis would have been a simple reminder of what was possible when COVID-19 struck the US in March 2020.
The Federal Reserve released a press release at 5 p.m. on a Sunday that month informing everyone that the coronavirus outbreak had disrupted economic activity. The federal funds rate has been reduced to within a range of zero to 1/4%.
It was the Fed’s way of reassuring America that we got this, we’re watching the situation.
On Saturday, March 21st at 9 p.m., Robert Broeksmit, president of the Mortgage Bankers Association, emailed Federal Reserve Chairman Jerome Powell and then Treasury Secretary Steven Mnuchin warning that the mortgage market was in danger would close the following Monday if the Feds didn’t announce any plans to start buying mortgage-backed securities.
The next Monday morning, the Fed announced that it would in fact buy enough mortgage-backed securities to keep the market running smoothly. The market didn’t collapse.
That was one of the more interesting stories told at the California Mortgage Bankers Association conference Tuesday through Thursday, April 24-26. August, emerged in Dana Point.
There I interviewed many of the 650 registered participants and asked, among other things, what the mortgage industry has done in recent years to make the world a better place for consumers. Below are some of their answers.
- Shea Pallante, President of Sprout Mortgage, noted the remarkable transparency, consumer access and user-friendly technology available to consumers. As examples, he cited two of the nation’s leading lenders, Rocket Mortgage and United Wholesale Mortgage.
- Joe Dahleen, Head of Strategy at Home Scout, commented on the broad technological advances. “Last year and this year, mortgage lenders and mortgage lenders have done a record volume of home-based deals.”
- John Hedlund, Chief Operating Officer and Managing Director of AmeriHome Mortgage, cited advisory waivers. And he pointed out the cost and time that consumers save as mortgages are processed faster and cheaper.
- Paul Bloom, Regional Vice President at Certified Credit, sees a much higher level of consumer trust and trust in mortgage lenders in online reviews. “Consumers can do more than they have,” said Bloom.
- Carissa Orozco, director of business development at Reverse Vision, cited a reverse mortgage regime that requires seniors to show they are able to repay taxes and insurance. Nobody wants a borrower to fail and be foreclosed.
Question 2: What shortcomings in the mortgage industry need to be addressed from a consumer perspective?
- Wesley Hoaglund, CEO of Lenox Financial Mortgage Corp., believes that getting a mortgage is way too hard and the process is way too slow. “Why can you go to a Porsche dealer and buy a Targa worth US $ 165,000 in 30 minutes, but never a mortgage,” asked Hoaglund.
- Alex Kutsishin, CEO of Sales at Boomerang, complained that lenders spam customers after completing a mortgage transaction by repeatedly sending pointless and unnecessary sales pitches for products that are clearly no longer needed.
- Broeksmit believes the industry needs to close the home ownership gap between whites and minorities.
- Pallante said consumers needed better education about the mortgage process and the wide variety of mortgages available. It all starts with training ignorant loan officers who too often turn down qualified borrowers.
Freddie Mac rated news: The 30-year fixed rate averaged 2.87%, 1 basis point higher than last week. The 15-year fixed rate averaged 2.17%, also 1 basis point higher than last week.
The Mortgage Bankers Association reported a 1.6% increase in mortgage application volume from the previous week.
Bottom line: Assuming a borrower receives the average 30-year fixed rate on a compliant loan of $ 548,250, last year’s payment was $ 12 more than this week’s payment of $ 2,273.
What I see: Well-qualified borrowers locally can obtain the following fixed-rate mortgages at 1-point costs: A 30-year FHA at 2.25%, a 15-year conventional at 1.875%, a 30-year conventional at 2.5%, a 15 -Year Conventional High Balance ($ 548,251 to $ 822,375) at 2.125%, a 30-year Conventional High Balance at 2.75%, and a 30-year Fixed Jumbo at 2.875%.
Eyecatcher credit of the week: A 30-year fixed rate jumbo at 2.625% with 2 point costs.