Mortgage State of Affairs
February 20, 2015
Written By: Ross Jameson
Mortgage Industry Consultant
After 35 years in the mortgage industry, I’ve come to expect changes every year. The most dramatic changes I’ve seen have been in the past few years. The start of the mortgage makeover in 2008 created new standards that are now common practice. The Secure and Fair Enforcement Act (SAFE) signed into law under the Housing and Economic Recovery Act (HERA) provides consumer protection. License requirements for all new Mortgage Loan Originators (MLOs) and yearly renewal education has been good for our country. As a mortgage educator for the Arizona School of Real Estate & Business and mortgage consultant, I’ve seen these recent changes also strengthen our industry. The changes that impact this year look positive:
Low interest rates, home prices stabilizing and balance of the supply of homes is a step in the right direction. It’s good to see home ownership growing after several years of decline. The American dream of owning a home is becoming popular again. Some programs to highlight include:
- FHA MIP reduction of .5% per annum will give the homeowner who purchased in recent years the opportunity to adopt a streamline refinance. This will lower payments while mortgage rates remain low.
- The 97% Home Possible Loan Programs with 3% down on a conventional loan with Fannie Mae and Freddie Mac is expected to give first-time home buyers the motivation to buy. This program is especially positive for the millennials who have been reluctant to become homeowners.
- Many down payment assistance programs are currently available. Accumulating savings for a down payment has always been difficult for renters and first-time buyers. “Home in Five” and “Half Percent Down” are FHA programs that are not limited to first-time buyers.
- Arizona Housing Authority provides a 4% grant down payment assistance for conventional loans.
- VA Loans require no down payment and are very popular for our Veterans. I actually bought my very first home with a VA loan – it was an easy process then and still is today.
The most significant change in 2015 will occur on August 1 from the Consumer Finance Protection Bureau (CFPB.) This change will focus on how loan fees and term estimates are presented to the borrower. RESPA and TILA disclosures are combining to be called the Loan Estimate (LE.) The HUD 1 Settlement Statement will be called the Closing Disclosure (CD.) The Closing Disclosure must be presented to the borrower 3 business days before signing. The mortgage industry has always been the acronym king of real estate language with RESPA, TILA, HUD, GFE and now with this new addition, LE and CD.
After all my years in mortgage, I personally continue to find the industry to be interesting. It’s extremely rewarding to help people become homeowners or create financial solutions through refinancing and other methods. For people looking to enter the industry, or for those who left it during hard times and want to come back, there are great opportunities to make an excellent income. The development of a solid marketing plan for business, to build or re-build a network, will always be the key to a successful career.