You'd think our recent experience with the Great Recession liquidity crisis would have been an easy reminder as to what's possible when COVID-19 slammed the U.S. in March 2020.
The Federal Reserve issued a press release at 5 p.m. on a Sunday that month letting everyone know the coronavirus outbreak had disrupted economic activity. The federal funds rate was being reduced to a range of zero to 1/4%.
It was the Fed's way of reassuring America that we got this, we are monitoring the situation.
At 9 p.m. Saturday, March 21, Mortgage Bankers Association President Robert Broeksmit sent an email to Federal Reserve Chairman Jerome Powell and then-Treasury Secretary Steven Mnuchin warning that the mortgage market would shut down the following Monday if Feds didn't announce plans to start buying mortgage-backed securities.
On the next Monday morning, the Fed announced it would indeed buy enoughmortgage-backed securities to ensure the market functioned smoothly. The market did not crash.
That was one of the more interesting stories to emerge
from the California Mortgage Bankers Association conference held in Dana Point this past Tuesday through Thursday.
While I was there, I surveyed many of the 650 registered participants, asking among other things what has the mortgage industry done in recent years to make the world better for consumers? Below are some of their answers.
Shea Pallante, president of Sprout Mortgage, pointed to the remarkable transparency, consumer access and user-friendly technology available to consumers. He cited two of the nation's top lenders in the country, Rocket Mortgage and United Wholesale Mortgage, as examples.
Joe Dahleen, head of strategy at Home Scout, weighed in on the broad technological advances. "Mortgage originators and mortgage lenders did a record volume of business working from home last year and this year."
John Hedlund, chief operating officer and managing director of AmeriHome Mortgage, cited appraisal waivers. And he pointed to the cost and time consumers are saving as mortgages get done faster and cheaper.
Paul Bloom, regional vice president at Certified Credit, sees a much higher level of consumer trust and confidence in mortgage lenders in online reviews. "Consumers can do more at their fingertips," Bloom said.
Carissa Orozco, director of business development at Reverse Vision, cited a reverse mortgage provision requiring seniors to show they have the ability to repay taxes and insurance. Nobody wants to see a borrower fail and get foreclosed.
Question two: What mortgage industry shortcomings need improvement from the consumer perspective?
Wesley Hoaglund, CEO of Lenox Financial Mortgage Corp., thinks it's way too hard to get a mortgage and the process is way too slow. "Why can you go into a Porsche dealer and buy a $165,000 Targa in 30 minutes but never a mortgage?," Hoaglund asked.
Alex Kutsishin, CEO of sales for Boomerang, complained lenders are spamming clients after closing a mortgage transaction by repeatedly sending pointless, needless sales pitches for products that clearly are no longer needed.
Broeksmit thinks the industry needs to address the homeownership gap between whites and minorities.
Pallante said consumers need to be better educated about the mortgage process and the wide variety of mortgages available. It all starts with educating loan officers, who too often reject qualified borrowers.
Freddie Mac rate news >> The 30-year fixed rate averaged 2.87%, 1 basis point higher than last week. The 15-year fixed rate averaged 2.17%, also 1 basis point higher than last week.
The Mortgage Bankers Association reported a 1.6% increase in mortgage application volume from the previous week.
Bottom line >> Assuming a borrower gets the average 30-year fixed rate on a conforming $548,250 loan, last year's payment was $12 more than this week's payment of $2,273.
What I see >> Locally, well-qualified borrowers can get the following fixed-rate mortgages with 1 point cost: A 30-year FHA at 2.25%, a 15-year conventional at 1.875%, a 30-year conventional at 2.5%, a 15-year conventional high-balance ($548,251 to $822,375) at 2.125%, a 30-year conventional high-balance at 2.75% and a 30-year fixed jumbo at 2.875%.
Eye catcher loan of the week >> A 30-year fixed-rate jumbo at 2.625% with 2 points cost.