How do mid-year market changes impact initiators
Mortgage professionals never know what the industry has in store for them, so staying on top of market changes can help originators prepare for what lies ahead. GSE risk reduction efforts, migratory shifts, demographic shifts and more are pushing the market to adapt to meet the needs of today’s borrowers.
After a season of high volume refinancing, what’s next for the mortgage industry and how can originators set themselves apart from the competition?
Modification of the borrower’s activity
Due to COVID-19 and other factors, the market has changed to accommodate more borrowers than ever before. An increase in trips from city centers to more suburban areas occurred during this period due to the historically low environment and a widespread adaptation of remote working.
Borrowers have now moved into homes which in many cases are rising in value and may need to shoulder renovation costs or consolidate debt, resulting in an increased need for cash refinancing. There has also been a change in the way people work – more people than ever are self-employed and have taken advantage of the economy of odd jobs and entrepreneurial opportunities. These independent borrowers, who may need to use alternative qualifying methods for mortgages, have grown by over 1.4 million people in the past year to a total of 9.65 million Americans. self-employed in April 2021.
The increased need for withdrawal refinancing prompts originators to prepare with a variety of product offerings, particularly in Texas where withdrawal refinancing is governed by different rules. Additionally, originators will now need a means of qualifying independent borrowers who may need to rely on bank statements to qualify for a mortgage.
To have an arsenal of products intended for these types of borrowers, originators must have a partner, such as FGMC, which has a range of proprietary products (Maverick solutions), for non-agency and non-QM products.
Recent changes to government agencies
Government agencies provide the products that are the backbone of day-to-day selling, but what happens when borrowers don’t follow the guidelines? Recently, the GSEs have limited the original percentage for second homes and investment properties and have placed additional restrictions on risk attributes on files in an effort to reduce risk.
This restriction on the volume of investment properties has been a growing problem, with the volume of second homes increasing by 178% per year in April. Restrictions on multiple risk factors can also impact borrowers who have student loans, credit card debt, or have had financial setbacks due to issues related to the pandemic.
Having off-branch products in a principal’s wheelhouse enables it to meet the growing need for alternative lending options. For example, with FGMC’s Maverick Solutions, originators can send a volume of second home loans to the business without volume restrictions, even though it can be considered an agency product. Maverick Solutions also offers higher DTI ratios, higher LTVs, and larger loan amounts than traditional agency products.
High-priced markets and real estate
Low inventories and high prices lead to a decrease in the volume of home purchases and the amounts of purchase loans that close are increasingly large. The average purchase price has increased over the past four consecutive months to reach $ 384,000 in May 2021, according to data from the Mortgage Bankers Association.
With this in mind, Jumbo products are essential in today’s market. It is essential to have a lending partner capable of providing higher loan amounts for the high priced markets of the country. To meet this demand, FGMC’s Maverick Solutions offers AUS-eligible Jumbo products with loan amounts of up to $ 3,500,000.
The Knowledge Advantage
In today’s market, offering off-agency lending options to originators gives top talent the resources to grow their business, record deals that may not meet agency guidelines, and ultimately remain successful in the industry. For recruiters, make sure your company supports initiators with partners who help do the heavy lifting on training around non-QM and non-agency products.
For creators, attending learning sessions throughout the month is a great way to stay on top of market trends. If creators don’t take steps to understand the growing market for alternative products, they are missing out. Such knowledge helps originators to differentiate themselves from their competition and allows them to offer more options to borrowers.
Interested in becoming an expert in alternative products and the market? FGMC is organizing a State of the town hall of the non-QM / non-agency market this Thursday July 22sd at noon CST. They also offer monthly webinars via Maverick flight school. For more information on working with FGMC or their non-agency and non-QM Maverick Solutions product line, visit https://fgmc.com.