Survey says! The biggest threats to housing: compliance burdens, access to credit

3% down products a start, but industry still needs work

The industry is making progress when it comes to access to credit and compliance, but the same headwinds that burdened the industry over the past year aren’t easing anytime soon, at least that’s what people inside the industry believe.

Taking advantage of all the people in attendance at the 2016 Mortgage Bankers Association Annual Convention and Expo in Boston In October, Genworth Mortgage Insurance, an operating segment of Genworth Financial, surveyed industry executives, gathering opinions from more than 200 mortgage professionals to see the state of the industry.

The results fall in line with other sentiments at the convention that the mortgage industry has a better handle on regulation and is ready to start innovating.

The survey digs further into the feelings the industry still holds toward regulations even if they are ready to start looking ahead to more technology.

Turns out, the industry still feels the same burdens it did a year ago when the Consumer Financial Protection Bureau’s Know Before You Owe mortgage disclosure rule, also called the TILA-RESPA Integrated Disclosures rule, went into effect.

The industry cited two main headwinds then and now: Increased compliance burdens and access to credit viewed.

Forty-five percent of respondents identified increased compliance burdens as the biggest threat to the housing industry over the next 12 months. An additional 32% cited borrower access to credit as the biggest threat, 20% believe the biggest threat is the current rising rate environment, and 3% cited lack of progress on GSE reform as the most severe industry threat.

When Genworth asked this same question at the 2015 MBA Annual Convention and Expo in San Diego, the results were almost identical (about 1% variation on all four responses).

The survey also dug into thoughts around the 3% down, an area the industry doesn’t currently have a lot of information on.

For now, Freddie Mac does not release the data on its 97% LTV product but has stated the program is rapidly growing in demand.

According to the survey, 71% of respondents view the impact of borrower requirements placed by the GSEs on 97% LTV loans either negatively because they restrict mortgage credit or neutrally because they haven’t had a major impact on originations.

The remaining 29% view the impact as positive because they help mitigate risk for originations.

John Clifford, senior vice president of Commercial Operations at Genworth, explained that affordability is a big deal in terms of overall originations and obstacles in front of first-time homebuyers.

Clifford stated that while the industry is slowing dipping its toes back into low down payment products, it’s growing.

However, he said, “It’s an incremental step into this. We’re making sure that we take the right steps and the right pace to expand credit.” 

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