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44 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t survey: Fear of rejection Freezing Potential Homebuyers Buyers still shy of purchasing Because many fear Being denied. California // A new con- sumer survey finds nearly half of potential homebuyers are sitting out this season out of fear of today's tighter mortgage credit conditions. According to survey results released by independent home lender loanDepot, 56 percent of Americans who don't currently own a home but would like to purchase in the near future say they're not pursuing it right now "because they fear they won't qualify for a loan." Among cur- rent homeowners who wish to re-enter the market, 30 percent hold the same fear. Furthermore, just fewer than three-quarters of Americans who fear they won't qualify admitted they haven't actually taken any steps to find out. "We're well into this year's homebuying season, and too many potential buyers and sell- ers are sitting on the sidelines because they're afraid they can't qualify for a home loan before they've looked into it," said Dave Norris, president and COO for loanDepot, adding that room is slowly opening up in today's market for borrowers with less than stellar credit. "Potential buyers are forfeiting their dreams of homeownership before they find out what financing options are available to them." That fear was more con- centrated among first-time homebuyers, many of whom fit into the 25–34 "millennial" age bracket. "Our loanDepot survey con- firms uncertainty and confusion about qualifying for a loan are driving more young potential buyers away from homeowner- ship than any other age group. However, their uncertainties and fears may be much worse than reality. Growing the first-time homebuyer market share may be as simple as going online and ex- ploring the options," Norris said. Out of those not pursu- ing a loan due to qualification concerns, 53 percent said they think it's harder to get a loan today than it was last year— however, according to monthly data released by Ellie Mae, credit standards have actually loosened compared to a year ago, with the approval rate of mortgage applications rising nearly 3 per- centage points year-over-year in March to 58 percent. cFPB report details Pain Points of loan closing Process the procedure still shows weaknesses. Washington, D.C. // The steady ramp-up in loan closing requirements reached a head this year with the implementation of new lending guidelines—and a re- port from the Consumer Financial Protection Bureau (CFPB) shows Americans are fed up. As part of its "Know Before You Owe" initiative to stream- line mortgage lending, CFPB released the results of a year of research on the closing process, including comments collected from both consumers and mar- ket participants. The findings indicate frustration all around. "Mortgage closings are often fraught with anxiety," said CFPB director Richard Cordray. "We have taken action to address some of the problems consumers face, but more needs to be done." Among consumers, the most common complaints the bureau saw dealt with the complexity and sheer amount of paperwork required to finalize a loan. Adding to the frustration is the relatively short amount of time consumers had to review all the documents before signing, often because a delay on the part of a lender or other agent creating a ripple effect. As one respondent expressed, "[S]ince the loan documents showed up at the last minute, I had no choice but to sign, even though the terms were different than was promised." CFPB found every consumer interviewed would prefer to receive loan documents at least two days prior to closing. (Under the agency's proposed rule, loan stakeholders would be required to provide consumers with their new closing disclosures at least three business days in advance, though that rule doesn't apply to additional paperwork added at the closing table.) Also of concern to consum- ers and settlement agents was the number of errors in closing documents, which can create additional delays as the pack- age is redone. In some cases, respondents said they had to correct misspelled names as the paperwork progressed, only to find out they were misspelled differently at closing. Among industry participants, common frustrations included a lack of standardization among closing packages and perceived legal risk as they seek to protect themselves from regulatory or litigious actions. Brian Benson, CEO of closing services firm ClosingCorp, sees firsthand the struggle lenders ORIGINATION LocaL Edition