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How lenders can serve the underserved in 2022

Being where your customers are will be the only way to get new business in the coming purchase money market

Our business is changing…again. This time, the industry must respond to new mandates sent down by the new administration in Washington, D.C.

President Biden has made it quite clear that lenders will be tasked with providing more affordable housing options to underserved communities. How the industry will accomplish this is not yet clear.

Further, the new Director of the Consumer Financial Protection Bureau, Rohit Chopra, appears ready to take lenders to task should they fail to make every possible effort to put homeownership into the reach of more Americans. In his own words, as quoted by this publication:

“In the mortgage market, fair and effective oversight can promote a resilient and competitive financial sector, and address the systemic inequities faced by families of color.”

There has been a fair amount written about how lenders may or may not be capable of overcoming these systemic inequities and meet the President’s affordable housing mandate.

Lenders can certainly make any loan product from Fannie Mae or Freddie Mac, or for that matter any government-insured loan product, available to their borrowers. What they can’t do is create more inventory to sell them.

And, of course, they can’t get more underserved borrowers to fill out a loan application. Or can they?

Borrower outreach in the new mortgage business

For much of the past four decades, many lenders have built very successful businesses by simply waiting for mortgage rates to drop and then taking the resulting orders for rate/term refinances. Put a borrower in a home loan and then start looking for one with better terms and close them again. It’s been a very profitable business.

But it’s going away. As mortgage interest rates slowly inch upward, the refinance loan volume is falling. What once accounted for about 75% of the mortgage business is down to about 30% as of this writing and is projected to fall to about a quarter of all loan originations by the end of next year.

As we move into 2022, purchase money mortgage loan business will be the only avenue for growth. Traditionally, this business has been influenced and largely controlled by real estate agents, but that business is changing, too. More borrowers are finding properties online and new real estate sales models could change how they work with agents.

In all of this confusion, it will fall to the mortgage originator to send out a clear message to home loan borrowers, letting them know their options and pushing for unfiltered contact with new homebuyers. If the industry doesn’t step up its new borrower outreach efforts, it could appear to government regulators that the industry isn’t taking the President’s mandate seriously.

The Mortgage Bankers Association understands the importance of sending this message out today. The organization has been urging all loan originators to take the Homes for All Pledge. The lenders that take action on this important cause will be the winners in 2022.

The messages consumers need to hear now

Many of the American consumers the administration would like to see join the ranks of homeowners don’t even think they have a chance of getting into a new home. They have been rejected so often that they believe they are not qualified.

Many don’t even understand what it will take to qualify. They haven’t studied a process they felt didn’t apply to them and no one has stepped up to explain it to them. Further, many don’t have a traditional credit report that will be approved by a loan underwriter. Others have completely given up.

The government will be doing its part to convince Americans that they can afford a new home. The mortgage lending industry will have to do its part by reinforcing that message and providing the “how” to go with that dream. Crafting this message and connecting with borrowers will set successful lenders apart in 2022.

When they connect with these borrowers, you can bet it will be online.

Meeting borrowers where they are in 2022

That’s why we’re building SRE.com, the world’s first online destination for homebuyers, sellers and investors that gives consumers everything they want, including trusted support for their real estate buying and financing transactions.

It’s about human-assisted eCommerce and it’s what’s coming to our industry next. Consumers love technology and they’ve been going online for many years now to find their dream homes.

In the past, it hasn’t been as easy for them to find real estate financing…but that has all changed. SRE.com is spending millions on this new online destination and we want you to be part of it.

This is every lender’s opportunity to step up to the line and make their front line loan originators available to consumers who have never enjoyed the opportunity homeownership offers. SRE.com puts you in the same place as home loan borrowers who are looking for someone to trust.

Being where your customers are will be the only way to get new business in the coming purchase money market. It will also be one of the best ways to show regulators that you are taking the President’s affordable housing mandate seriously. But it only works if you have your free profile set up on the system.

Get your profile on SRE.com today…for free!

Visit SRE.com today to get your free profile and be part of the homeownership solution.

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