We asked Ernest Jones Jr., president of the National Association of Mortgage Brokers, how third-party originators are navigating this market and what the trade group is doing to help push for policies that could reduce hurdles to financing homes as rates rise.
Some edited excerpts of his remarks follow.
What does lender competition and consolidation mean for brokers?
Generally, if a broker loses a wholesaler for whatever reason, very seldom is there a void that's not filled. You may lose the experience of having worked with that lender, but I don't know many situations where brokers had to say, "We can't get this loan done because there's not a player there to do it." If you go back to an era like 2008, '09 or '10, it was different, but in a typical market today we have enough wholesalers.
Pricing can still be competitive, and not only between lenders. Now that the FHA has cut their mortgage insurance premium their loans are more competitive with others.
Overall, interest rates may decline a little or rise for borrowers depending on where or who they are, so whatever your situation is, you just have to deal with it. I try to focus on the things we can control as opposed to the things we cannot. You can't control rates.
Brokers have to stay educated and educate the consumer. Then simply give the buyer the facts. We have a few partnerships with wholesalers to that end. For example, NAMB has a reverse mortgage certification sponsored by industry partner Liberty Mortgage. NAMB is also working on an FHA certification sponsored through industry partner Freedom Mortgage. Additionally, NAMB offers VA and credit certification courses.
When wholesalers provide these programs they're saying, "next time a borrower wants, say, a reverse mortgage or FHA loan, think of us." It doesn't guarantee them anything.
Brokers and consumers normally go with companies they like and trust with the best products. In general, you might have broker complaints about a wholesaler, but not often. When it does happen, NAMB will reach out to the wholesaler. The wholesaler will generally resolve the matter.
What are the top policy issues for mortgage brokers today?
NAMB recently held its legislative conference in Washington D.C. Trigger leads were the No. 1 issue and the expanding the small creditor definition under the Qualified Mortgage rule was No. 2. Another item on our radar is policy around making sure Americans are safely covered under the National Flood Insurance Program.
We also focused on benefits for Gold Star spouses. Before age 55, surviving military spouses lose the benefits they would have gotten if they remarry. One of the things we're fighting for is to have those benefits reinstated and for those individuals to keep the benefits in the future.
Another item is protecting the rights of veterans presenting a VA home-mortgage offer in conjunction with the purchase of a home. There are misconceptions regarding the VA home loan and/or appraisal process being more difficult or longer than for other mortgages.
Often home purchasing offers for veterans are turned down because the seller has been misled about the VA loan process. At one time, NAMB considered focusing on fighting to have the VA buyer become a protected class to deal with this. Instead, NAMB is working to better educate and discourage discrimination, thereby keeping the playing field level.
What about the 203(k) loan the FHA wants to improve?
Everything goes back to education on how the product works. It takes patience with the 203(k) and the Realtor community does not generally encourage the use of the 203(k). When a potential homebuyer walks into a home and it's already done, he or she does not have to imagine what it's going to look like when remodeled.
There is no one specific reason why the 203k product is not used more often. It can be challenging if not properly executed. Technology may be able to help increase the use of this product by showing what the home will look like after repairs.
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