Take your mortgage broker to lunch, and she might spill the beans about her industry's dramatic changes in 2010. Despite assurances by economists that the recession has ended, soft real estate prices, nervous consumers and confusing new regulations have made it more challenging to take a new mortgage loan from the original quote to final closing.
Three of the past year's most influential mortgage trends:
- Mortgage Lender Shakeout. At the height of the refinance boom, veteran mortgage brokers expressed concern about the number of new players in the home finance industry. In hindsight, many of the companies that tried to make a quick buck helped inflate real estate prices while saddling consumers with high closing costs. Market pressures have purged most poseurs from the industry, enabling consumers to get more consistent, quality service.
- Refinance Pressure. Although today's mortgage rates have risen from all-time lows, they still encourage most homeowners to consider refinance deals. In parts of the country still recovering from popped real estate bubbles, borrowers must wait for home prices to rebound before they can consider a refinance. Meanwhile, residents in more economically stable states have discovered huge monthly savings by investing enough cash into closing costs and home equity to qualify for refinance deals.
- The Foreclosure Glut. As analysts watched the number of foreclosure starts drop throughout the year, some industry observers wondered whether the trend indicated an end to the nation's financial struggle. According to the National Bankers Association, nearly 1 percent of American homeowners face foreclosure. However, banks have become reluctant to take all of their delinquent borrowers through the foreclosure process because of questions about paperwork handling and because foreclosure auctions have failed to generate much investor interest.
Despite repeated headlines about a looming crisis in the mortgage industry, these three trends have combined to benefit both lenders and consumers. The majority of mortgage brokers and lenders that remain in the industry have committed themselves to helping homeowners thrive. Instead of chasing profits above everything else, most mortgage professionals express faith that strong customer service during periods with the best mortgage rates will help drive loyalty and profits as home values and finance charges rise.