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Some in the housing industry feel that lenders continue to make mortgage loans difficult to obtain, even for well-documented, credit-worthy consumers. However, three big players in the lending realm – Wells Fargo Home Mortgage, Quicken Loans and Chase Home Mortgage – disagree.  Their representatives sat down with the National Association of Realtors for a roundtable discussion about the lending environment and what they feel is truly holding back loans, including uncertainty about the future role of FHA, Fannie Mae and Freddie Mac and the new rules coming out of Washington. 1

For many of us in the industry, 2012 was a busy year especially for refi’s. While speculation abounds that the refi market will dip later this year due to rising interest rates, the lender roundtable commented that purchase loans are up and that direction will continue during 2013. They have prepared for a strong purchase market in terms of staffing and can handle the volume. They point to new rules put in place that have slowed down the loan process – not due to their own staffing or processing capabilities.

The lenders also voiced their concerns about securitization versus the role of private market lending.  While they are all making portfolio loans, they need to know the future of Fannie, Freddie and FHA in order to see how they can “fit in” and operate in such an economy.  Even so, the lenders say that there is no real infrastructure in place now to handle a private securitization market.

Over the next several months, lenders will be focused on understanding new rules and implementing technology and processes in order to comply.  Resources invested in technology in the past were done with a goal of improving the business and ultimately improving revenue.  In today’s CFPB world, most technology resources now must be utilized for compliance.  In this regard, many smaller banks are wondering if they will survive since their technology pockets aren’t as deep s those of the bigger national banks.

The CFPB rules, as well as lessons learned before, during and after the housing bubble certainly have and will continue to affect our industry.  Do you agree that lenders are not to blame for the tight lending environment?  How can risk mitigation and caution be balanced with the need to provide mortgage funding to consumers, which will then stimulate the housing market?  How are the new rules affecting the focus and operation of your business? Do you think the increased cost and complexity of regulatory compliance may block out smaller lenders? And, if so, will the “Too Small to Play” principle have ripple effects into the title insurance market?

1Lenders:  What’s Holding Back Loans? By Robert Freedman, March 12, 2013

 The information provided is for informative purposes only and is not intended to be legal advice or a legal opinion.  For legal advice, please consult an attorney.

Patrick T. Roe

General Manager


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