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In the coming year, the focus will be on purchase money. The refi market continues to erode, even as rates have softened the past few months, and although new home starts are gaining momentum, there is a sheer lack of inventory across the country.
As demand returns, it’s important that the industry collectively strives for balanced growth. One measure to help in this area will probably come from more refinement of collateral valuation.
Agencies are rolling out new tools, such as Fannie Mae’s Collateral Underwriter, to provide ever-greater accuracy of underlying collateral value. Although many will see this as yet another hurdle to the loan process, increasing the ability to access data around valuation should serve to keep the industry ahead of alarming trends in geographic pockets.
Organizations that have structured themselves operationally and from a sales and marketing standpoint to excel at purchase transactions have already made a smooth transition.
“CMG Financial’s operational platform was built with the agility needed to support our originators and referring partners who thrive in a purchase market environment,” said John Hummel, senior vice president consumer services and business development.
CMG Financial’s goals for the coming year reflect the company’s conviction that industry best practices require intense collaboration with its various partners, including agencies, regulators, the MBA and investors.
“To continue to focus support around our sales talent, the company is developing a platform for Realtor partners to provide them with true marketing support, aligning ourselves as business partners rather than just as a transactional lending outlet,” Hummel said. CMG will also provide a more formalized program for homebuilders and partner with agencies to support greater data refinement.
“Providing high-level communication with our AMC’s regarding valuation tools will maintain our ability to keep the process smooth and on track for borrowers and all involved,“ Hummel said.
Addressing regulatory reform, CMG Financial has always embraced a “lean-in” policy, Hummel said. The company has a platform for change management, including senior executive talent, which anticipates and prioritizes early adoption of new regulatory developments.
As regulatory reform continues to tighten the credit box, CMG Financial has developed loan products to fill the needs of underserved borrowers. “We believe as an industry we should be collaborative with agencies, regulators, the MBA and investors in finding ways not to exclude viable homeowners,” Hummel said. “We don’t view non-QM products as a market play, but as a way to identify well-qualified, gainfully employed individuals who do not fit QM restrictions as defined today.”
The company is also expanding the footprint of its proprietary All In One home loan, a first lien HELOC intended for borrowers who have positive cash flow. The loan includes a fully functional checking account embedded within it, which allows borrowers to blend their earnings with their mortgage debt, lowering their loan’s daily balance and monthly interest payments significantly and automatically.
“Where possible, our industry should be looking to innovate loan programs that have the potential to reduce overall mortgage debt for homeowners, rather than inflate it over time,” said Hummel. “While not the right solution for every borrower, our All In One loan has the potential to save significant amounts in interest costs, thus reducing the overall amount of mortgage debt acquired compared to conventional financing.”
CMG has expanded its footprint into nearly every state, and will continue its growth in 2015, but in a balanced way. “Many companies out there are interested in aggressive acquisition in order to grow. CMG Financial could easily be 500 MLO’s and 150 branches today, but we’re very strategic as we continue to expand,” Hummel said.
“The unifying element that sets us apart is our culture. We attract individuals that embrace the passion we have for driving their business everyday. It’s an intangible quality we make tangible with every interaction,” Hummel said. “It’s imperative that what makes us distinctively CMG — our culture and the boutique approach that we leverage to keep our organization intimate and not institutional — is the standard we use to filter new branches and talent.”