This Friday, April 1st is an important day for the Mortgage Industry. As a Realtor it was important for me to understand what the implications of the new Mortgage Regulations that go into effect this Friday mean in an attempt to better serve my clients. If you are in the real estate business, just looking to buy or sell a home, take the time to read below to understand the new changes and why you should care.
The mortgage industry has already lost 65% of originators since January 1 2008 according to The National Mortgage Brokers Association. It is also estimated that another 10-15% over the next 6-12 months we leave the business.
Getting closed through large banks will become even more difficult and take much longer. Mortgage Brokers will be the hardest hit. It is predicted that many mortgage broker companies will go out of business. The already-limited mortgage market is about to become even more limited, as small mortgage brokers are essentially being shoved out of business. Our government calls it "unintended consequences" yet in my opinion anyone with eyes can see it's nothing more than a plan to channel more of the mortgage business dollars to the "too big to fail" banks. Yet regardless of the motivations, the rules may end up limiting consumer choices while making it harder for home buyers to get a loan.
Interest rates will generally be higher across the board as banks (and brokers) struggle to cover overhead. As we have seen in many other "Fed Regulations"... the buyer loses.
Tougher loans (i.e., foreclosed properties; tough credit; lower loan sizes; unique properties, etc) will become more difficult to close. A loan officer will have to be paid the same rate whether it is an easy loan that takes two weeks to close or a foreclosed property in need of rehabbing for marginal borrowers that takes three months of work to close. Just when the country needs the most experienced and knowledgeable mortgage professionals to help liquidate the flood of foreclosed homes, the Fed is making it unprofitable for loan officers to accept these deals."
As an American it saddens me to stand buy and watch while an entire industry of small businessmen and women are being eliminated from the work force by our government.
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