December 2016 - Getting Serious About Diversity

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38 | TH E M R EP 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 ORIGINATION THE LATEST Real Estate Professionals Refer only a Select Few Lenders Reputation and convenience play a big role on who they recommend. M ost real estate profes- sionals refer clients to only a select number of lenders. The way they choose those companies is based on the ease of doing busi - ness with them, their reputations, and the strength of those relation- ships, according to a survey com- missioned by Freddie Mac. The survey found that 84 percent of real estate profes - sionals have a select group of lenders to which they general- ly refer their clients. Of this number, it was reported that 73 percent have one to three lenders in their network and 24 percent work with four to six lenders. Additionally, more than three-quarters, or 76 percent, say their clients always or often use their recommended lend - er referrals. The GSE reported that this number rises all the way to 87 percent among those who sell more than 20 properties per year. To reach these conclusions, Freddie Mac commissioned a survey of licensed U.S. real estate professionals about a variety of topics facing the mortgage indus - try. These included the challenges of growing their business and their views on the role they play in the homebuying process. What's more, more than 80 percent of real estate profession - als said their clients trust their knowledge of the area, their ability to help them find a home, and their ability to show them the right homes for their needs. An additional 78 percent saw them - selves as an advisor capable of assist- ing clients with their navigation of the homebuying process. On the other hand, 35 percent of respondents said they feel challenged by clients' lack of understanding of the homebuying process. And only 38 percent of real estate professionals said their clients would find them to be a trusted advisor who could help refer them for housing counseling if they need or want more education on the process. Likewise, it was found that real estate professionals are marginally less confident when it comes to educating buyers on the mortgage process, sitting at 50 percent, and down payment assistance pro - gram options sitting at 30 percent. 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 35 % Of respondents said they feel challenged by clients' lack of understanding of the homebuying process. Appraisal Turn Times Rise, but Lenders Say TRID is Innocent A lack of appraisers, as well as spikes in origination volume, may be to blame. M any involved in the origination process feared that the additional compli - ance and resources required as a result of the CFPB's TILA-RESPA Integrated Disclosure Rule (TRID) rule would result in costlier and lengthier originations. TRID went into effect on October 3, 2015. STRATMOR's Appraisal Process and Turn Times Survey, released as part of the company's Insights report for October 2016, found that appraisal fees and turn-times have indeed increased over the last year—but not because of TRID. The survey, which featured responses from 56 unique lenders during a one-month period from August 16 to September 16, 2016, found that appraisal turn-times in the post-TRID originating world had increased substantially—by 5.74 days for purchase loans and by 6.28 days for refinance loans. Those numbers calculated to increases of 79 percent and 81 percent, respec - tively, from pre-TRID turn-times. Many of the lenders surveyed did not attribute the increases to TRID, however. According to STRATMOR, many of the survey respondents cited a sharp increase in origination volumes from Q2 to Q 3 as well as a lack of qualified appraisers. "TRID has had very little direct impact on appraisers from my standpoint," said Erik Richard, CEO of Landmark Network. "TRID did affect some appraisal pricing; however AMCs, for the most part, have shielded apprais - ers from any significant adjust- ments. The current turn-time delays and noteworthy price shifts in certain markets can be traced to an increase in volume coupled with the reduced number of active full-time field appraisers working in the mortgage financial transaction market." Appraisal fees have also increased, though not as much as turn- times. The survey found that appraisal fees in the post-TRID origination world climbed by an average of approximately 15.8 percent over pre-TRID numbers. Not one of the 56 lenders who responded report - ed that appraisal fees had declined since TRID went into effect. But just like with appraisal turn-times, the lenders surveyed reported that the increased fees were the result of a lack of qualified appraisers and a spike in origination volume. Two-thirds of lenders surveyed said they use appraisal manage - ment companies (AMCs) to obtain appraisals. The other one-third said they used either an in-house ap- praisal panel (AP) or a combination of AMCs and an AP. The lenders who said they use AMCs said that property location and service were the primary factors in their decision. "TRID has had very little direct impact on appraisers from my standpoint." —Erik Richard, CEO, Landmark Network

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