MReport July 2018

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 15 this year, some lenders will have a tough time continuing to move forward due to capital funding limitations. The issue in a down volume market, is who will continue to invest to make the process better and simpler, and drive transparency for consumers? Second, players who introduce products that are mean - ingful in the context and serve their customers' changing needs will continue to thrive and will be the disrupters who accelerate the pace of change. Those who do not in- novate in this period will find it very difficult to compete in the coming years. These challenges also create huge opportunities for people who get their strategy right, putting the customer first, continuing to invest and innovate, and staying true to who they are as a business. All too often, mortgage cycles cause organizations to cut jobs, trim costs, and stop innovating. Lenders must resist this temptation. M // What advice would you give a young professional just entering the mortgage industry? SCHUPPENHAUER // Be passionate about what you do every single day. You must be driven by a sense of purpose; this will add so much meaning to your work. If we think about it, housing is a major decision in people's lives. As soon as one understands how critical buying a home is to a family, the U.S. economy, and to everything we do, housing starts to become more than just a job; it becomes a purpose. That's what motivates me, and why I want to continue to innovate in the mortgage space. "All too often, mortgage cycles cause organizations to cut jobs, trim costs, and stop innovating. Lenders must resist this temptation." MONTH IN REVIEW 1 Nearly one in 10 borrowers get denied for mortgages, according to an analysis by LendingTree, which looked at data from more than 10 million mortgage applications. 2 Average new mortgage loan balances declined from $235,361 in Q1 2017 to $229,538 in Q1 2018, a TransUnion Industry Insights Report found. 3 On average, homeowners reported paying $1,443 each month on housing costs, which includes mortgage payments, insur- ance, property taxes, and HOA fees, according to NerdWallet. 4 Ginnie Mae reported that its portfolio of single-family home loans declined from $239 mil- lion in March to $185 million in April. 5 First American's Loan Application Defect Index indicated a decrease in the fre- quency of defects, fraud, and misrepre- sentation in mortgage loan applications by 1.2 percent in March from February. 6 Close to 80 percent of homes sold between $70,000 and $150,000 were financed with a traditional mortgage in 2015, the Urban Institute reported. 7 According to a Zillow report, 20.9 percent black borrow- ers and 15.5 percent Hispanic borrowers were turned down for a conventional loan in 2016. 8 Redfin found that the most affordable city for teachers is Pittsburgh, Pennsylvania, where 39 percent of homes for sale were ac- cessible to this demographic. 9 Freddie's Mac's most recent Outlook predicts that mortgage rates will average 4.9 percent in Q4 2018 and 5.4 percent in Q4 2019, respectively. 10 According to HELOC study conducted by JD Power, 58 percent of study respondents indicated that they considered at least one other lender during the shopping process. Tapping Into Lending Trends This month, a range of studies delved into the origination market. We distilled some of the top findings to give you a clear picture regarding what trends are impacting lending.

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