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and it dictates if you
will grow or move along
as this year comes to a close, it’s
a good idea to look ahead at trends
that will affect the mortgage industry
in the coming year and beyond.
Clearly, the mortgage industry is at
or near a low point. How long we will
stay at that point — or if it will get any
lower — remains to be seen.
Whatever happens, brokers must assess their business and position themselves for a future that could include more
originations and higher interest rates.
Because any uptick in the economy
or housing market should result in more
business for brokers, you may want to
consider two options:
hiring more employees 1. to handle
increased volume and to remain
retiring from the old way 2. of doing
business, perhaps by joining a larger
lender that can meet new compli-
ance and regulatory requirements.
As you likely know, the yield-spread
premium is a regulator target, and brokers shouldn’t be surprised if it goes
away or is changed significantly. If it
does, can your business succeed on
origination fees alone?
An interest-rate increase also seems
inevitable. Record lows can’t be sustained in any cyclical business, and
mortgage rates are no different. When
it comes to rates, brokers should work
toward and promote reasonable increases that don’t catch borrowers off-guard or out of breath.
Moreover, if wages increase, higher
interest rates may be affordable. Many
experienced professionals have worked
through higher-rate environments in
which demand did not evaporate.
It also seems unlikely that home
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By Mitch Harmann
USA Funding Corp.
values will increase drastically any time
soon. A continued trend of lower home
prices should increase affordability for
some time to come.
Another trend that has affected and
will continue to affect the mortgage industry comes via technology, which offers opportunities for better customer
service and interaction. Many brokers
anticipate closing their loans electronically without the use of printed documents. Another possible development
is a virtual closing, using live online-telephone and -video services.
Brokers looking to embrace technology should work toward simplification
and integration of new systems. Borrowers might be as excited as you about paperless or virtual transactions. But they
won’t remain excited if those technological solutions change into stumbling
blocks that stall closings. In addition, a
great idea is just that if no one adopts it.
Regulatory trends and changes also
will continue to define how brokers do
business. What new laws will be passed,
amended, developed, held up or denied
remains uncertain. Even so, elected officials and regulators almost certainly will
be more involved in the mortgage industry next year.
A possible advantage of increased
regulation is job creation. More employees could be required on the broker and
government ends. Moreover, some regulatory changes could yield technological
solutions and workflow changes. Then
again, regulations could create more
compliance-related costs for brokers
and limit pay. Overall, trends sparked
by legislation seem likely to lead to consolidation in the brokerage sector.
Brokers who fail to keep up with
trends and plan for possible changes —
regardless of how or where they occur —
could find themselves sitting idle while
their industry transforms around them.
Whatever trends come about in 2010,
being an early identifier of which direction the industry takes could determine
whether you as a broker should hire for
your business or retire from your current practices. •
Mitch Harmann is team manager at USA Funding Corp. in Brookfield, Wis. The company is
a member of the Wisconsin Mortgage Professionals Association, the National Association of
Mortgage Brokers and Lenders One. USA Funding specializes in residential retail and wholesale
originations. Reach Harmann at (414) 273-LOAN
(5626) or firstname.lastname@example.org.
Fixed rates are 2.5% to 4.5% Interest Only for 3 years Non-Recourse Loans Closings within 10 days Loan-to-value ratios up to 80% Loan proceeds may be used for any purpose Contact: Donna Nortell • 786-235-0888 • Donna@elite-dbnloans.com • www.elite-dbnloans.com SECURITIES-BASED LENDING No Income! No Credit Score! No Documentation! Eligible securities include publicly traded stocks, bonds, mutual funds, and T-notes Borrower retains all market appreciation and receives the benefit of any dividend or interest that the securities generate The borrower’s liability is limited to the collateral pledged for the loan DBN LLC
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