Genworth Mortgage Insurance surveyed approximately 105 mortgage professionals attending the recent Mortgage Bankers Association’s National Secondary Market Conference and Expo, in order to gauge perceptions of issues facing the mortgage industry.
Here's what they found is keeping mortgage professionals up at night.
Genworth's survey determined that 79% of respondents believe both rising inflation and the re-emergence of alternative mortgage products present the two biggest challenges facing our mortgage industry. Notably, an additional 21% cited that the loosening of credit standards, and excess liquidity were also sources of concern, though the jury is still out on the former concern. Do you agree? Comment on the message boards below to let us know.
“Rising interest rates and inflation, when combined with today’s inventory shortage, are accelerating home price appreciation, causing some lenders and consumers to explore less-tested methods for financing home purchases,” Genworth Mortgage Insurance President and CEO Rohit Gupta said.
“Despite this, private mortgage insurance is experiencing another strong year, particularly among first-time homebuyers, as the majority of consumers and lenders still prioritize financing solutions backed by tested, well-capitalized businesses,” Gupta added. “We encourage prospective homebuyers to continue educating themselves on all available options prior to pursuing homeownership, and to ensure that their financing method is as sustainable as it is affordable.”
Genworth’s additional data indicates that 26% of respondents included adoption of alternative credit scores and ambitious affordable housing goals for the GSEs as the best way to improve access to credit.
However, a whopping 74% of respondents think lowering compliance cost and removing legal uncertainty for lenders originating FHA-insured loans are better alternatives.
The good news is that those same mortgage professionals wanting to reform the process of FHA loan insurance have a silver lining, because on Tuesday, FHA Commissioner Brian Montgomery claimed the Trump administration plans to dial back the use of the False Claims Act. On a call with reporters, Montgomery said he believes this will bring more lenders back into FHA-backed lending.
“I think the previous administration made some moves in the right place around the defect taxonomy and the loan review system,” Montgomery said. “But lenders still want greater certainty around what’s the bright line, what are the parameters, if you will.”