Mortgage professionals never know what the industry will throw at them, so tracking market shifts can help initiators prepare for what’s to come. GSE’s efforts to mitigate risks, migration shifts, demographic changes and more are forcing the market to adapt to the needs of today’s borrowers.
What will happen to the mortgage industry after the season of high refinancing volumes and how can lenders distinguish from competitors?
Change in the borrower’s activities
As a result of COVID-19 and other factors, the market is attracting more borrowers than ever before. An increase in the number of transfers from city centers to others. commuter rails occurred during this time as a result of historically low speed and widespread adoption of remote work.
Borrowers have now settled in homes, which in many cases are rising in value, and may have to take on renovation costs or consolidate debts, which is driving a greater need for cash refinancing. There has also been a shift in the way people work – more people than ever are self-employed and have taken advantage of the gig economy and entrepreneurial opportunities. The number of self-employed borrowers who may need to use alternative qualification methods to obtain mortgages rose more than 1.4 million last year to 9.65 million self-employed Americans in April 2021.
The increased need for cash-back refinancing is prompting originators to prepare with a variety of product offerings, especially in Texas, where cash-back refinancing has a different set of rules. Additionally, senders will now need to have a way to qualify self-employed borrowers, who may have to rely on bank statements to qualify for mortgages.
Having an arsenal of products designed for these types of borrowers requires that senders have a partner, such as FGMC, which has its own product line (Maverick solutions), for non-agent and non-commercial products.
Recent changes in government agencies
Government agencies provide products that form the basis of day-to-day sales, but what happens when borrowers don’t meet guidelines? Recently GSE limited percentage of origin for second homes and investment property and imposed additional restrictions on risk attributes in files to mitigate risks.
This limitation on investment property is a growing problem as the volume of secondary housing in April increased by 178% y / y… Multiple risk factor limits can also affect borrowers who have student loans, credit card debt, or financial setbacks due to pandemic-related issues.
Having non-agent products in the shipper’s wheelhouse allows them to meet the growing need for alternative credit options. For example, using FGMC’s Maverick Solutions, senders can send a second home loan volume to the firm with no volume restrictions – even if it could qualify as an agency product. Maverick Solutions also offers higher DTIs, higher LTV and higher loan amounts than traditional agency products.
Expensive markets and real estate
Low inventory and high prices as a result of which the volume of home purchases felland closing loan amounts are getting bigger and bigger. The average purchase price has risen over the past four straight months to reach $ 384,000 in May 2021, according to the Mortgage Bankers Association.
With this in mind, Jumbo products are indispensable in today’s market. It is imperative to have a loan partner who can provide higher loan amounts for high-value markets across the country. To meet this demand, FGMC’s Maverick Solutions offers AUS eligible Jumbo products with loans up to $ 3,500,000.
In today’s marketplace, offering non-agency loans to initiators provides the best talent with the resources to grow their business, retain deals that may not meet agency guidelines, and ultimately remain successful in the industry. For recruiters, make sure your firm supports originators with partners who help do the hard work of training non-QM and non-agent products.
For authors, attending training 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 on the business. Such knowledge helps originators to stand out from their competitors and allows them to provide borrowers with more opportunities.
Want to become an expert on alternative products and the market? FGMC conducts State of the town hall of the non-profit / non-agency market this Thursday, July 22nd at noon CET. They also offer monthly webinars via Flight School Maverick… For more information on working with FGMC or their line of non-agency and non-QM Maverick Solutions products, visit https://fgmc.com…