In the diverse universe of American homeownership and housing finance, there are a multitude of elements at play – from the federal angle to the private sector, the experience of getting or sustaining a home is an intricate tapestry of factors. This writ-up swings the spotlight on the noteworthy issues encompassing housing and mortgage.
Let’s start at the basic level – the rule of thumb of knowing if you are adequately ‘adulting’ – keeping your home clean. Part of being responsible homeowners includes maintaining a clean living space. As petty as it may sound, important decisions are made here, amongst piles of laundry or sparkling countertops. Also, we would go on to mention the advantages clean homes bestow on its inhabitants – think clean air, fewer germs and lesser stress. Not to mention, it also greatly contributes to a feeling of self-satisfaction and productivity. Above all, did you know a clean home can even result in happier dreams?
Now that we had our dose of house hygiene, let’s sail to a rather amusing territory – the world of residential lending, which before you hustle to dismiss as bone dry and boring, comes with its fair share of quirk. Although let’s admit, it doesn’t come without its set of challenges. One of which lies in closing loans in a timely manner. The loan closure process can be a thorny labyrinth for newcomers, or even veteran business owners, as it involves compliance with a string of state and federal regulations.
Take for example, the recentist policies in California and other parts of the nation concerning Disparate Impact and Fair Lending. Staying compliant with these announcements can be a testing task, not to mention the role disparate impact plays in unintentionally excluding certain racial or economic groups from housing opportunities. The promotion of Fair Lending practices addresses these issues and works towards creating an inclusive lending environment.
The scenario thrives with ever-evolving changes too. Articulating the Winthrop & Weinstine attorney’s views, it is essential for those in the lending business to adapt to these changes, in order to ensure their survival in this environment. These shifts in policies are particularly significant now, considering that the incoming Biden administration will likely introduce further changes that affect the entire industry notably.
That being said, the labyrinthine legal landscape isn’t the only challenge in the residential lending universe. As the pandemic pushes more and more businesses to turn online, security threats have sky-rocketed. Instances of fraudulent credit applications have ramped up, forcing lenders to implement robust security measures. In fact, even the Federal Housing Finance Agency (FHFA) is diligently working to reduce the number of loans sold with defects, and Fannie Mae and Freddie Mac, the giants in the mortgage industry, are not immune to such defects.
Clearly, adapting to technology advancements is critical to maintain the smooth functioning of routine operations. Automation can prove instrumental in enhancing efficiency and mitigating compliance-related risks. Technology has indeed been a boon to the mortgage industry, where effective algorithms can be the key to faster processing of loans and strategic decision making. Few innovative strides in the sector include touchless technology and eSignatures which not only fast-track the process but also eliminate geographical boundaries.
After an exploration in the residential lending realm, let’s hop onto discussing what’s new in the world of mortgage rates. The Mortgage Bankers Association’s weekly survey reveals an increase in the application volume, reflecting a boost in mortgage rates yet again.
In this context, let’s take a while to mention how, in spite of the pandemic, mortgage businesses are more disposable income. The stimulus bill signed into law has bolstered the economic position of many companies, while the flexibility of remote working has led to organizations saving on various operational expenses.
Now onto other pressing concerns in homeownership and lending, such as the impending foreclosure crisis and the Chapter 13 bankruptcy code. Facing foreclosure is a nightmare for homeowners, but the current Federal foreclosure moratorium provides a temporary reprieve. Besides, the Chapter 13 bankruptcy code comes in handy as it allows homeowners to restructure their loans to hold off foreclosure. However, with the pandemic and ensuing economic crisis, it remains to be seen how these policies will hold up.
Consequently, stakeholders in the housing industry, like Freddie Mac, continually iterate the importance of availing forbearance options to distressed homeowners to help them survive these trying times, along with a stress on the necessity of financial education. For instance, the very idea of charging loan-level fees for mortgages is misunderstood by many. Often, they are mistaken to insinuate that the borrower has to pay an extra fee, while these are actually paid by the lender to the agencies.
Hence, in this whirlwind tour of various contours shaping modern housing finance, we see an assortment of factors at play. It’s about acknowledging the existence of these elements and addressing them, all the while maintaining the quirky charm of the residential lending journey.
To sum up, while the road to getting or maintaining a home is riddled with many ‘ghouls’ hiding in the nooks and crannies of the mortgage industry, it’s not lacking in ‘fairies’ either. Here’s looking at a future where the ‘fairies’ of financial education, fair lending policies, technology, and timely information make the ride a tad less bumpy for everyone involved. This is a journey of transformation indeed – here’s to the highs, the lows, navigating through the myriad facets of the landscape, and evolving along the way.