Laura Brandao, Author at Scotsman Guide

Under One Roof

Laura Brandao — Wed, 01 Mar 2023 09:00:00 +0000

In the bygone days of the early 1900s, it was more common than not to have multiple generations living under one roof. It wasn’t only the family farm that was passed through the generations with children, parents and grandparents living together. This was the norm everywhere. The idea conjures images of children coming home from school to see grandma tending to her garden or grandpa snoozing in the recliner. The family gathered around the dinner table to chat about the day. Today you can leverage this nostalgia to answer some contemporary housing challenges.

What are some of the advantages of multigenerational housing? Well, when a family chooses multigenerational housing, they can provide comfort to aging parents, delay costly nursing home care or help a young family care for children while offsetting child care costs.

Being open to multigenerational housing can answer needs for a variety of family situations. Maybe it’s a relative who needs a home while attending an out-of-state college or a distant relation staying for a few months while visiting from another country.

This option also is a good way to help adult children avoid paying high rents while they save toward a downpayment on a future home purchase. Snow-bird retirees who live for part of the year in multigenerational housing are able to maximize their independence while maintaining precious connections to their family.

Multigenerational housing does not need to be a permanent arrangement, but it can be one if it suits the needs of the families involved. Mortgage originators should not only mention this as an option but offer creative financing that could make this a possibility.

Emerging trend

To this point, why aren’t trusted housing advisers openly suggesting this to their clients? The idea that an adult child must vacate the family nest and fly out on their own is misguided. For example, the Pew Research Center last year reported that nearly four in 10 men between the ages of 25 to 29 live with older relatives.

This way of life in the U.S. has grown sharply over the past five decades with no signs of peaking. Pew reported in 2016 that 20% of the country lives in multigenerational households. That’s nearly the same share as in 1950, when 21% of Americans lived in multigenerational homes. The difference is that in 1950 these living arrangements included 32.2 million people. In 2016, 64 million Americans lived in multigenerational households. Some of this can be attributed to growing racial and ethnic diversity in the country, but it’s not the sole reason.

The reasons why this make sense are as numerous as family living arrangements. For instance, a family could be modifying their home to accommodate an older generation. The payoffs can be peace of mind coupled with strong bonds between children and grandparents.

Early on, grandparents can help with after-school child care, allowing their kids to pursue career goals. Later on, the grandparents can have a place to stay without the worry of home maintenance. They are free to enjoy their senior years as they see fit in a safe environment. A home renovation mortgage can provide financing in these cases.

Evolving families

Maybe a job situation is the impetus for generations living together. Let’s say a woman is an only child and her father passes away, leaving behind an elderly mom. Then the woman’s husband gets a new job and they move across the country, leaving the woman in a bind. How does she care for her mom in her later years while living so far away?

The answer may be for the mom to move in with the couple. They can sell each of their homes and pool equity together to buy a new house with a mother-in-law suite in a new state. No one is left behind and the elderly mother is able to begin her independent retirement years surrounded by family with few property responsibilities. Purchase programs for existing homes or newly built construction can be attractive for borrowers like this family.

With home prices as high as they are, many young couples are choosing to start married life living with one of their parents. They’re doing this in order to save as much as they can toward a downpayment for a home. This is usually a short-term situation, but with the ongoing housing shortage, these stays can shift from a matter of months to a few years. Patiently waiting for the right house at the right price, they may even start their own family.

Three generations deep, there will come a day in the near future for these young couples to move out, but as long as the arrangement is amicable, they’ll save for that first-time home purchase. They’ll be in need of a mortgage adviser to help them when that time comes.

Financial incentive

Although providing care (either child care or elder care) is a driving reason for multigenerational housing, financial reasons also are huge factors in making this choice. If two can live as cheaply as one, then what’s the payoff for adding a few more to the mix? Multigenerational living arrangements can be the difference between living in poverty and not.

Multigenerational housing is one way for people to escape paying rent to a landlord or making payments to an assisted-living facility. Imagine how much equity a family can build if they’re using the extra money that would have gone to a rental or care facility to pay off the mortgage on the family’s primary home.

Oftentimes, multigenerational families will need extra space. And that’s where an accessory dwelling unit (ADU) may make sense. An ADU is a small dwelling that is either attached to a typical single-family home or a separate unit located on the same grounds. More cities and counties are allowing this type of construction to deal with housing shortages. ADUs can be financed with a cash-out refinance, renovation refi or a construction-to-permanent loan option to make this dream a reality.

A close cousin of multigenerational housing is Fannie Mae’s Family Opportunity Mortgage. This loan product allows clients to get a mortgage for their elderly parents or a disabled adult child. Your clients qualify for the mortgage, but the loved ones occupy the home.

Many families who are on the threshold of sending a child to college find that on- and off-campus housing can be more costly than the tuition bill. Smart spending could come in the form of an owner-occupied small home purchase where the college student is the occupant but the parents are on the mortgage note.

Qualified borrowers can leverage standard purchase or refinance options across Fannie Mae, Freddie Mac and Federal Housing Administration products. The college student attends the university as a commuter and once graduation has commenced — provided the market has grown and the home was maintained — there should be a nice return on investment once the property is sold. There can be roommates to generate rental income, too, if that’s a plan the parents and student want to explore.

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Mortgage professionals should be mindful of the changing needs of their clients. Once the loan closes, you owe it to your borrowers to periodically check on them and make sure the home still fits. If there is a change in circumstances, you can calm their stress by offering lending solutions that help them maximize the equity they’ve built so they can refinance, make modifications and continue enjoying the comfort of their home.

If a move is needed to accommodate their family changes, you have the opportunity as their trusted mortgage adviser to reassure them with existing home and new construction purchase options. It’s almost like you’re a member of their family. ●

The post Under One Roof appeared first on Scotsman Guide.

Confront Today’s Challenges With Confidence and Hope

Laura Brandao — Wed, 01 Feb 2023 10:00:00 +0000

Hope is that intangible little gem that resides deep inside the brain, a force of positive energy when things appear the bleakest. In a 2017 study, Chinese psychologists found that hope protects the brain against anxiety. The psychologists defined hope as an important part of positive psychology, referring to an individual’s expectations that include both the desire to achieve goals and ways to achieve them. Does this “desire to achieve” sound like you?

What does all of this have to do with mortgage lending anyway? Simple. When things are at their most challenging, banding together with your team of business partners is a natural way to foster hope and inspire excitement. And things are challenging at the moment as interest rates are much higher than a year ago, housing inventory is in short supply and home prices remain stubbornly high.

But the mortgage industry has been here before. The difference between then and now is that mortgage professionals are better trained on how to navigate the challenges being experienced across the industry. Now is the time to call in your team for a talk and then do it again. Why? Because of hope.

It is natural to seek out others in times of turmoil. Everyone needs an extended hand. As you look forward to the rest of this year, tap into this good energy and welcome the challenges ahead with confidence and hope.

Past connections

Your book of business probably looks much different today than it did a year or two ago. Whether it’s an abridged version or a total rewrite of last year’s book, it’s still yours, and the connections you’ve retained are still with you for one reason: relationships.

Let’s start with the families who relied on you to get them to the closing table. Don’t just let them ride off into the sunset with their moving vehicle with nary a wave or nod. Keep in touch. How? Be proactive by creating a post-closing follow-up checklist (and do this before your loans close). Borrowers have a lot of “new” in their lives right now and they will appreciate you checking in regularly to head off confusion.

The mortgage industry has its own language and if your borrower is new to having a mortgage, it’s a guarantee that they are not fluent in all of the terminology. Let them know to expect mail in their mailbox — and to open it. Caution them that mortgage mail is unfamiliar. It could easily be mistaken for junk mail and not recognized for being valuable.

Did they get notified to send in their first payment? Who did they send it to? Was their loan sold or will it eventually be sold? This might require some careful explanation by you, their trusted mortgage originator. Check in again after 90 days to confirm that they received a copy of their closing package. If they did not, you are once again at their rescue, educating them on their rights and how to obtain these important documents. Were escrows involved in the mortgage? Your 90-day check-in would be a good time to ensure these items are up to date and correct.

Check in at least monthly with each of your contacts via phone or email. Make it personal by using their first name at the beginning of an email. If you’re currently doing business with them, this is not the moment to discuss the loan file, but a “saw this and thought of you” email is a helpful reminder that you are looking forward to their future business.

Industry expert

Do you have a customer relationship management platform? If you do, is it automated to send out drip campaigns, seasonal greetings, etc.? If you don’t have one, get one. And set it up to send your referral partners news they can use.

This information is available by reading industry trade publications every day to see what is happening in the mortgage business. Did you see anything that grabbed your attention? Chances are it also will be of interest to your business partners. You need to share this with them. After all, you are their industry expert.

Are new lenders contacting you? Listen up. They might have something to offer that you’ve never sold before. This might blow your mind, but there’s more to mortgage lending than the simple refinance and purchase loans — e.g., disaster lending, renovation programs, manufactured homes, chattel property, construction-to-permanent loans, downpayment- assistance programs and so on. Niche products are a lender’s pride and joy, so learn about them and then share the knowledge. Putting good vibes into the universe returns the same.

Winter months are not a time to hibernate. Spring is right around the corner and historically it’s when the purchase business picks up. Invite your lending partners to learn about niche programs that today’s buyers need. So many homebuyers are first-timers and are unaware of the options available to them. Your lending partners need you to be the industry expert so they can take care of these neophyte clients. Renovation loans through the U.S. Department of Veterans Affairs? Nonqualified mortgages? Downpayment-assistance loans? Learn about them and teach them. Pick up this rhythm and add your own beat to it.

Social media is not just for entertainment. These are the platforms many turn to for information. Are you maintaining your relationships by liking other people’s posts? Are they liking yours? If not, there’s no time like now to bust out your Instagram, Facebook, Twitter or LinkedIn accounts to freshen up the space. Not up on social media? Well, no one uses rotary phones anymore either. It’s time to step into the current century and get started. Your competition is already doing it.

Clients and referral partners want to see you as their trusted industry expert (emphasis on “see”). Social media has literally put free marketing in the palm of your hand. You are the captain of your own marketing ship — hoist the sail and start to post your own brand of hope and possibilities with a side of tasteful humor to make it memorable. Post cheerfully and post often.

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When the loans start coming in — and they will — continue to remind your business partners how important their relationship is to you. You are there for them. The weekly or biweekly check-in should never be a condition of market volume. You have your clients’ and referral partners’ backs, and they will have yours. That is the reward for thoughtful business relationships. ●

The post Confront Today’s Challenges With Confidence and Hope appeared first on Scotsman Guide.

Come to the Rescue after Disaster Strikes

Laura Brandao — Thu, 01 Dec 2022 09:00:00 +0000

There’s weather and then there’s extreme weather — the kind that devastates an area in the matter of moments, leaving families homeless and facing insurmountable losses. For folks in a presidentially declared major disaster area who have lost their primary home, mortgage originators can be of great comfort and assistance.

The source of aid? The Federal Housing Administration’s 203(h) loan, a government-insured mortgage program that can help get affected residents back into a safely constructed home sooner rather than later. The first question to ask yourself is, what is a presidentially declared major disaster area?

If a borrower has fallen into the ‘derogatory credit’ category, a lender may look at their credit history to see if it was acceptable prior to the presidentially declared major disaster.

These are usually declared in any area that suffers a severe natural disaster. This can be such things as hurricanes, tornadoes, earthquakes, volcanic eruptions, landslides and other major catastrophic events. This presidential declaration labels the disaster to be of such severity that it is beyond the combined capabilities of state and local governments to respond. Government experts consider the extent of the disaster, the impact on individuals and public facilities, and the types of federal assistance that might be needed. In some cases, the final determination can take weeks.

Families who are the victims in one of these disaster areas are suffering from loss of home, community and services; fractured infrastructure; interruption of supply chain; and in many cases, loss of life. Mortgage lenders and originators have the resources to help by utilizing the FHA 203(h) program.

Rebuilding communities

Why FHA 203(h)? Some of the advantages of the program, including the option for 100% financing, is that it includes lower mortgage rates and more flexible qualification requirements, as well as a lower credit-score requirement. This specialty program is designed to help victims in these disaster areas recover by making it easier for them to obtain mortgages and either become homeowners or reestablish themselves as homeowners.

Any person whose primary residence has been destroyed or severely damaged in a presidentially declared disaster area is eligible to apply, even if they were renting the property. The program provides mortgage insurance to protect lenders against the risk of default on loans to qualified-disaster victims.

Due to the nature of the work needed to correct the damage sustained by these homes, this is a construction program, not a renovation program. An FHA 203(h) mortgage is one way to provide a displaced homeowner with a way to move out of a disaster area or to rebuild their damaged home and return to it.

One of the goals of this program is to help retain a sense of community by offering financing that entices victims to remain in place rather than relocate. Rebuilding communities retains the integrity of neighborhoods and supports recovery of the area at large while providing local businesses with continued traffic that ensures they can continue to operate. A community rebounds easier when its local businesses “survive the storm.”

Understandable hardships

The 203(h) program offers features that make homeownership easier. For example, since no downpayment is required, the borrower is eligible for 100% financing if they choose and qualify. Repayment terms of 15 or 30 years are available.

Closing costs and prepaid expenses must be paid by the borrower in cash or through premium pricing by the seller, subject to a limitation on seller concessions. The lender also collects an upfront insurance premium (which may be financed) from the borrower at the time of purchase, as well as monthly premiums that are not financed but added to the regular mortgage payment.

Borrower credit qualifications and rules are still required. But the minimum credit score for the 203(h) loan is lower than for many other government-backed and conventional mortgage programs, which aids disaster victims who also may be dealing with credit challenges. (Lender overlays also may apply.)

Thankfully, this age of technology can help families recover some of what was lost. Given the nature of the circumstances that established the need for this specialty program, borrowers will need to work closely with their mortgage professionals to provide the required documentation. Lending agencies are familiar with the hardship of destroyed records due to the devastation of the homes they were stored in.

In difficult times like these, supporting documentation from other sources such as the IRS or other agencies will need to be relied upon. If a borrower has fallen into the “derogatory credit” category, a lender may look at their credit history to see if it was acceptable prior to the presidentially declared major disaster. If derogatory credit was a direct result of the effects of the disaster, the borrower will be deemed a satisfactory credit risk.

Flexible guidelines

Unlike some other government-backed and conventional mortgages, the FHA 203(h) program does not apply borrower income limits. Lenders typically use a debt-to-income (DTI) ratio of 43% to determine the loan size that a borrower can afford, although it is possible to qualify for a 203(h) loan with a DTI ratio of 50% or higher under certain circumstances (varies by lender).

The DTI ratio represents the maximum percentage of a borrower’s monthly gross income that can be spent on fixed monthly housing expenses. This includes the mortgage payment, property taxes, homeowners insurance and mortgage insurance premium, as well as other potentially applicable expenses such as homeowners association fees, plus other monthly debt payments such as credit cards, auto loans and student loans.

The higher the debt-to-income ratio applied by the lender, the larger the loan your borrower can qualify for. Circumstances under which it is possible to get approved for an FHA 203(h) loan with a DTI ratio of 50% or higher include borrowers with excellent credit scores or job histories. Borrowers making larger downpayments and those with supplemental sources of income that may not be reflected on their mortgage application, such as from a spouse or part-time work, also may qualify with a higher DTI ratio.

Lenders may exclude the mortgage payments on a borrower’s destroyed or severely damaged home when calculating the DTI ratio for a new mortgage. Excluding the payments on their current residence can significantly improve a borrower’s ability to qualify for a loan or enable them to afford a higher loan amount.

In this case, the FHA 203(h) lender is required to verify that the borrower is working with their existing lender to address the mortgage on the damaged or destroyed home. Additionally, any homeowners insurance payouts must be applied to the mortgage on the affected property.

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Homeowners who have survived a disaster and live in one of these presidentially declared major disaster areas need to be made aware of the FHA 203(h) option. It might just be the solution to start putting the fractured pieces of their lives back together. ●

The post Come to the Rescue after Disaster Strikes appeared first on Scotsman Guide.

Makeover Magic

Laura Brandao — Tue, 01 Nov 2022 08:00:00 +0000

America’s long love affair with home improvement and renovation found a home, naturally enough, on television. Think of the 1960s TV shows such as “Bewitched” and “I Dream of Jeannie” where the main characters could change their already stylish homes into something even more impressive with a twitch of the nose or a blink and a nod of the head.

Fast forward to the next decade when “This Old House” premiered and host Bob Vila took the mystery out of restoring homes. The show is still airing today. In fact, homeowners can satisfy their cravings with any number of home restoration shows on network TV, cable and streaming channels. More importantly, homeowners can star in their own show thanks to renovation mortgages.

Charm and character are coveted perks, and no amount of faux painting and distressing can ever replace the genuine satin patina caused by decades of footfalls smoothing an original hardwood floor.

As a mortgage originator, you can play the role of fairy godmother by sprinkling a little mortgage magic of your own. Renovation mortgages speak to all borrowers and there are loan programs for almost any scenario.

A veteran, for example, might want to leverage his benefit with a renovation loan through the U.S. Department of Veterans Affairs. A first-time homebuyer might find luck with the Federal Housing Administration’s 203(k) program, especially if the borrower won’t bring a lot of cash to bring to the table. A rural borrower might be empowered by a U.S. Department of Agriculture renovation mortgage. Additionally, Fannie Mae and Freddie Mac offer rehabilitation flexibilities through their HomeStyle Renovation and ChoiceRenovation programs, respectively.

When a less-than-desirable home is priced correctly and a subject-to-repairs value is calculated, a buyer has ultimate control in getting the home of their dreams by working directly with a contractor of their choosing. They control the major and fine details along with any layout changes. They have the luxury of keeping the long-established aesthetics of the neighborhood where the home was built.

Staying in place

Renovation loans are not only for the purchase market. They offer a terrific opportunity for a homeowner who loves their community but needs to modify their current home. They don’t want to move. They just want to fix up.

Taking a home from the past and modernizing it can improve a neighborhood. Charm and character are coveted perks, and no amount of faux painting and distressing can ever replace the genuine satin patina caused by decades of footfalls smoothing an original hardwood floor.

A rehab loan might be required to make room for an aging parent, or to make much-needed repairs such as a roof replacement or upgrades to an outdated kitchen. The empty nester could see the potential in redesigning and repurposing unused spaces. These projects are as varied as the borrowers and a renovation refinance can work mortgage magic. The bottom line is that your client doesn’t need to go when they may just need to grow.

Renovation loans help create inventory and aid buyers in expanding their search criteria. They provide more purchasing power so the consumer can customize and update the home their way while gaining instant equity due to the fact the appraisal is based on the after-repair value. When it comes to refinance options, the renovation loan is one of the most powerful options available for consumers. A renovation refinance is classified as a rate-and-term refi, meaning that they don’t have to pull out all their equity and cap their loan-to-value ratio.

A cash-out refinance is a good option to access equity but it often caps the borrower at a maximum of 80% of the existing property value. If they want to update their home or expand the square footage, then a renovation loan is the best option because it allows the consumer to max out the loan-to-value criteria. The mortgage is based on the after-repair value, which could add up to 20% to 30% in existing equity.

A smart consumer can leverage the equity in their home when seeking out a renovation refinance option. It is the mortgage professional’s responsibility to keep their eyes and ears open to the changes in the market to best time their loan process. It’s quite the win when the borrower takes out a renovation refinance and locks with a lower interest rate than what they are currently paying. When that happens, it truly can be magical.

Seeing the potential

In a home purchase situation, the savvy buyer can see past the cheap and failing original construction, or any decay caused by neglect, to imagine the potential of the location that lured them. Location, location, location is the Realtor’s original mantra — and it still rings true today.

Buying the worst house on the best block at a great price, supported by a renovation loan, is a recipe for having it all. It’s a terrific way to invest in real estate and boost the local economy. If the neighborhood is in high demand, the return on investment can be greatly enhanced when the time comes to sell.

It’s obvious that home improvement programs and YouTube videos do not make consumers experts on how to renovate a home. Confidence is key when taking on a renovation project. And consumers have that when they use a 203(k) standard renovation loan. The U.S. Department of Housing and Urban Development (HUD) requires borrowers to hire a consultant from a roster of preapproved options who have the borrower’s best interest in mind. All work must be certified by the HUD consultant. These consultants are not the second opinion; they are the only opinion.

The consultant charges a fee, which varies depending upon the project. Thankfully, they can take stress off the consumer by being the expert on everything construction related. The consumer can relax, knowing an expert has their back. The final inspection ensures that the work was completed to HUD’s strict standards, which protects both the consumer and the lender’s investment.

In today’s changing real estate market, mortgage originators should seek out and develop a partnership with a qualified and motivated HUD renovation consultant, said Catherine Hall, executive director of the National Association of FHA Consultants (NAFHAC). With rising interest rates and continually limited inventory, many borrowers and real estate agents will need sound advice for homes that aren’t move-in ready.

“A properly trained and dedicated HUD consultant can give lending professionals and their referral partners and clients the guidance and assistance to get the borrower where we all want them to be: on the other side of settlement in a safe, enjoyable home,” Hall said.

Building neighborhoods

The National Association of FHA Consultants touts itself as the only organization dedicated to increasing education, awareness and uniformity for everyone involved in the 203(k) loan program. The nonprofit organization has a mission to provide competency, consistency and community in the world of 203(k) consulting. NAFHAC believes in rebuilding neighborhoods one home at a time by offering one-on-one coaching as well as a wealth of information to help consultants stay connected to current trends and tools.

Capitalizing on the renovation trend, mortgage originators who partner with Realtors are positioned to make a positive impact on the communities they do business in. Renovated homes increase the value of surrounding properties, thereby financially improving the entire community. Referral business of all types is sure to follow. Originators who include renovation loans in their product portfolio position themselves as a solutions expert. Everyone wins.

Renovation can often be the more affordable choice and is better for the environment. It also serves as live programming for neighboring residents, who get the benefit of watching a home transform right before their eyes. It can be inspiring when the eyesore house becomes the best house on the block. After all, who doesn’t love a good makeover? ●

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The Future of Manufactured Housing is Here

Laura Brandao — Sat, 01 Oct 2022 08:00:00 +0000

It’s no secret that affordable homes are getting harder to find. Often, buyers must make compromises to stay on budget, such as opting for smaller, older homes with high upkeep costs. But there’s a type of home that offers affordability as well as beauty, energy efficiency and modernity.

Thankfully, these homes are not elusive. Manufactured homes are found all over the country and at every price point. In April 2021, Forbes Advisor reported that manufactured homes were priced 10% to 35% less per square foot than traditional homes. And according to Freddie Mac, the average price of a new manufactured home in August 2021 was $80,000, compared to $390,000 for site-built homes.

Across the country, manufactured homes are growing in popularity as a desirable choice for today’s savvy consumer.

Not to be confused by mobile homes in trailer parks, you will find these single-family gems in rural, suburban and urban neighborhoods — often in homeowners associations. They’re customizable, comfortable and often feature cutting-edge designs built with high-end materials. Thanks to rigorous building standards from the U.S. Department of Housing and Urban Development (HUD), they’re just as safe as site-built homes and appreciate in value in a similar way.

These homes can be built wherever a legal lot of land is purchased for residential use and can be hooked up to utilities and taxed as real property. And since this new generation of manufactured homes is increasingly being classified as real property, a wide variety of conventional and government-backed financing options are available to borrowers.

Building requirements

Manufactured homes have been around since the 1870s. In 1974, Congress passed the National Manufactured Housing Construction and Safety Standards Act, assuring that all homes were built to tough national standards. In 1976, HUD released its construction and safety standards for manufactured homes. And in 1980, in an effort to get away from the mobile-home moniker, Congress approved the renaming of this style of home to “manufactured home.”

Manufactured homes are permanently fixed to their foundations and can’t be moved, unlike mobile homes, which sit on wheels and are not permanently fixed. Across the country, manufactured homes are growing in popularity as a desirable choice for today’s savvy consumer.

Manufactured homes are built in a climate- controlled environment, which negates the need to protect the vulnerable site-built home from the elements. The strict safety standards in place provide today’s consumer with the confidence that they are investing in a safe type of dwelling.

All manufactured homes built today must be at least 320 square feet in size with a minimum ceiling height of seven feet, but most are a minimum of 400 square feet due to lending requirements from Fannie Mae and Freddie Mac. That’s just a starting point: According to the Manufactured Housing Institute, the average size of a manufactured home built in 2021 was 1,497 square feet.

Compliance with current building codes is not taken lightly. Many of these state-of-the-art homes now come with guarantees of craftsmanship and materials used. Quality materials and workmanship, affordable pricing and government-insured loans are the catalysts for the integration of manufactured homes into communities across America.

Bountiful benefits

Besides beauty, safety and quality, manufactured homes offer homebuyers a plethora of other benefits. People are becoming more aware of their carbon footprint and doing as much as they can to reduce it.

Because manufactured homes are built in a factory setting, the waste of construction materials is greatly reduced. Waste is costly — and these expenses are pushed onto the consumer. Less waste equals less cost burden on the manufacturer’s suggested retail price for these homes.

Many materials used in today’s construction industry are recycled or sustainable, and builders of manufactured homes now use many of these resources. And because builders buy bulk materials for multiple homes at a time, deliveries are limited and decrease the builder’s carbon footprint.

Once a consumer moves into one of today’s manufactured homes, it’s a relief for them to know that the operating costs will be significantly improved due to the caulking and insulation upgrades that manufacturers have put into standard practice. This is due to new U.S. Department of Energy insulation and energy-efficiency standards that builders of manufactured homes must meet.

Choices galore

If you are looking for a deal to make dreams come true — and your borrower is so short on time that they needed to move in yesterday — you should know that manufactured homes are eligible for renovation mortgage programs. A less-than-ideal home with potential, coupled with a great lender, can put a borrower into their perfect home faster than starting with a lot of land and a purchase agreement in hand.

Renovation is the ultimate green lifestyle. No bulldozer is needed — just a creative eye, an experienced contractor and an educated originator who can confidently advise along the way.

For a borrower who wants a new home on their own land, manufactured-home builders offer a wide selection of styles, amenities and materials. For those seeking custom homes without exorbitant costs, manufactured homes are a great fit. The options available are exactly what today’s homeowner craves.

Does size matter to your borrower? This home style has that covered: single-wide, double-wide and triple-wide sizes are available. What about amenities? These homes often have decks, fireplaces, walk-in closets, chef-grade kitchens with stainless steel appliances and more. Do they want to use high-end materials? Manufactured homes can include granite, tile or high-end wood for floors, countertops and more.

Beautiful interiors are available in every style: farmhouse, contemporary, traditional and more. Customize the exterior and add landscaping, and some of these homes are indistinguishable from their stick-built cousins.

Financing options

Manufactured-home financing is available to qualified borrowers who are seeking government-backed or conventional mortgages. Financing is available for purchases or refinances of new or existing manufactured homes. Both fixed-rate and adjustable-rate options exist for these homes.

The government-sponsored enterprises (GSEs) see the value that this style of home provides to today’s consumers and the communities they live in. Programs within each agency are similar, with only slight variations between them.

Fannie Mae offers conventional mortgages through the MH Advantage program and Freddie Mac does so through its CHOICEHome program. Construction-to-permanent financing also is available via the GSEs.

Government-backed loans are available through many Federal Housing Administration, U.S. Department of Veterans Affairs and U.S. Department of Agriculture purchase and refinance programs, including renovation and construction-to-permanent options. Some lenders also are open to chattel loans for manufactured homes that do not qualify as real property.

Boosting inventory

Manufactured homes are one of the best solutions for addressing the inventory shortage facing today’s homebuyer. These homes are affordable and luxury options are available at higher price points, meaning they can be built in any market.

These homes have shorter construction timelines than traditional site-built homes. Time is money and manufactured homes can be built in weeks instead of months.

Lack of inventory in today’s market has put a big dent in making homeownership a reality for so many first-time buyers. Not wanting to disappoint these eager consumers, many lenders have worked to solve this dilemma by learning more about manufactured-home financing opportunities.

Doing so also has expanded their book of business and market share with little effort. Agency programs were there all along; lenders just needed to turn the page to the next chapter and get started.

If and when the inventory shortage ends, will the demand for manufactured homes go away? Not likely. Who doesn’t dream of a high-quality, custom-designed home at a price they can afford?

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Manufactured homes keep evolving and getting better. By the nature of how they’re built, they can quickly implement new technologies, appliances, building materials, safety features and design aesthetics. The manufactured home is truly the unicorn of today’s available housing options. ●

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Be the Helping Hand for Underserved Borrowers

Laura Brandao — Thu, 01 Sep 2022 09:00:00 +0000

The American dream is the belief that anyone, regardless of their economic class or background, will achieve success through hard work, determination and drive. Many view homeownership to be central to this dream.

The journey to homeownership can be rewarding but also challenging. For some aspiring homeowners in underserved communities, the process may be even harder to navigate. The interest rate for a 30-year fixed mortgage has risen quickly this year to nearly 6%, according to a St. Louis Federal Reserve analysis of Freddie Mac data.

U.S. home prices soared earlier in the COVID-19 pandemic due to plunging interest rates and homeowners fleeing urban neighborhoods for suburban and rural areas. Coupled with the lack of inventory, this put an even bigger stress on the underserved mortgage seeker as they were unable to compete with the cash buyer. Supply chains struggled to deliver goods, which put a big hurt on construction activity and the supplies needed to build new homes. Now what?

Solution seekers

This is where mortgage originators enter the equation. These professionals have a responsibility and obligation to make sure they are serving the underserved borrower by offering agency programs and products as intended. The fit-into-the box mentality is over, and originators need to creatively meet the needs and challenges of the underserved. Mortgage originators are the solution seekers.

Federally backed loan programs and nonqualified mortgages alike have standards and guidelines, but not all lenders truly lend the way the agencies intend. Empowerment through homeownership is educational and mission-based. Underserved communities are therefore No. 1 with manufactured housing, renovation loans and government programs without overlays.

Education begins with the originator. The mortgage industry cannot remain stagnant and must take part in educating underserved borrowers. This also will help communities that are in dire need of rebuilding. It’s no secret that communities benefit from renovation projects that are often funded through a specialized mortgage program. Improvements to one home immediately will have a positive effect on the value of the surrounding homes, thereby boosting the desirability of the community. A trend can start with just one fixer-upper.

Undeserved borrowers

Who are these underserved borrowers? They may include self-employed and 1099 earners who can’t use tax returns to qualify for a home loan. Additionally, many people who are less than seven years removed from a foreclosure, short sale, bankruptcy or deed-in-lieu event are shut out of an agency loan even if they can satisfy ability-to-repay requirements and meet credit guidelines. Many others struggle with high rents and have no way to save toward a downpayment.

Residents in these communities often lack family wealth they can tap for help with a downpayment, or they earn too little to save for one. More so than other groups, people of color often lack anecdotal knowledge about how to obtain mortgages, which can add to the problem of limited financial resources. Originators need to point these potential borrowers to the existence of downpayment-assistance programs or lending programs that allow for a minimum 3% downpayment.

Rural, elderly, low-literacy, blue-collar and low-income populations also are commonly underserved. There are many local and national downpayment-assistance programs offered, and the agencies that run them are excited and eager to help. It just takes an interested and informed mortgage originator to facilitate the introduction.

Misconceptions persist at the neighborhood level that can spread unchecked. If people are unaware that there are downpayment-assistance programs or low-downpayment options, then these can be dismissed as rumors and myths in the underserved community. Originators need to constantly educate potential borrowers about mortgage products designed to be affordable for low- to moderate-income earners.

Federal resolve

This past May, President Joe Biden announced a new affordable-housing plan to ease the nation’s housing crisis. His administration started with a strategy designed to boost the supply of quality housing in every community.

Among the notable points of the plan are rewards for jurisdictions that have reformed their zoning and land-use policies. There will be a deployment of new financing mechanisms to build and preserve more housing types, such as chattel loans for manufactured homes, as well as expansion and improvement of existing forms of federal financing such as construction-to-permanent loans.

The president’s 2023 budget includes investments in housing supply that would lead to the production or rehabilitation of another 500,000 homes, along with a previously announced goal of 100,000 homes over the next three years. This action has received bipartisan support. And it’s an opportunity for mortgage originators to lay out options for qualified borrowers who hold the dream of homeownership.

Client outreach

There is more that the mortgage industry can do. This is every lender’s opportunity to step up and make their front-line loan originators available to consumers who have never enjoyed the opportunities that homeownership offers. Consider the first-time homeowner or the underserved borrower.

Understanding the needs of your clients is the best way to get new business in the coming purchase-money market. It also will be one of the best ways to show regulators that you are taking the president’s affordable-housing mandate seriously.

Get the word out that you are a consumer’s solution for navigating the myriad lending options. Market yourself as an expert in solutions. If your clients are social media focused, reach out to them with short and informative posts, tweets and videos.

If your clients are not up on the current trends in social media, your best marketing might occur via printed media or even a phone call. Educate yourself. Share what you’ve learned with your borrower. Let’s continue to empower people by helping them buy homes and fulfill the American dream. ●

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Building New May Be the Answer to the Bidding Wars

Laura Brandao — Tue, 31 May 2022 17:00:00 +0000

For the past 18 months, buying a home has been like a game of beat the clock. See house, like house, bid over asking price on house, lose house, then start the process all over again. Now, even with interest rates steadily on the rise and several rate hikes still to come, the housing craze remains largely the same.

Why? For one, there is simply not enough inventory. In fact, the number of U.S. homes for sale dropped to a record low in December 2021, falling 14.2% year over year, according to Redfin. Bidding wars will continue until housing inventory matches the number of buyers searching. Prices will continue to climb astronomically and clients will remain frustrated.

Stiff competition

It can be extremely discouraging for buyers to be constantly on the verge of having a place to call home, only to be outbid again. About 70% of respondents said that it’s a bad time to buy a house (likely because of the crazy competition that is causing prices to rise), according to a Fannie Mae survey conducted this past January. Starter homes, which can be roughly classified as those with 1,400 square feet or less, are few and far between, while COVID-19 has made suburban homes much more desirable.

A one-time-close loan allows a borrower to combine financing for a lot purchase, construction and permanent mortgage into a single first-position loan.

When these options for first-time buyers disappear, mortgage professionals are obligated to let clients know about alternatives. Especially at a time when inventory is at an all-time low, it must be a priority to help clients feel like finding a home is possible, educate them on loan programs that they qualify for and make their dream a reality.

One of the best alternatives right now may be to build a new house. With all the talk about expensive lumber prices, material delays and labor shortages, this might sound counterintuitive. But according to Redfin, more than one-third of homes for sale in December 2021 were new construction — the highest share on record and a number that is expected to increase. New construction may be the smartest move a prospective buyer can make in today’s market.

Debunk misconceptions

Before diving into why mortgage and real estate professionals should be recommending new construction as an alternative, let’s first debunk some misconceptions surrounding it.

Misconception No. 1: The average consumer won’t qualify for a construction loan because new builds are so expensive. Fact: When people think of new construction loans, they tend to picture a huge mansion. The reality is that modular and manufactured homes are just as popular. They make new homes possible — and much more affordable — for many consumers.
Misconception No. 2: The mortgage process for new construction is costly and time-consuming, requiring two closings with a construction loan followed by a permanent mortgage 12 months later, the latter of which could fall victim to higher interest rates and other rising costs. Fact: There are more ways to nab newly constructed homes without putting down 30% in cash and waiting a year to secure a mortgage. One option is a one-time-close construction loan.
Misconception No. 3: New construction and one-time-close loans are a recipe for disaster, with the potential to ruin a mortgage originator’s reputation. What if you say the wrong thing? What if your processors miss a step? What about the back end? Fact: Anything unfamiliar to you will seem scary at first. But just like any mortgage product, there are experts in this space to help guide you every step of the way. Having great partners and building the right network is what makes the mortgage industry thrive, and one-time close is no exception. From ensuring that permits are filed prior to closing to tips for handling the underwriting process, there’s no need to be afraid.

Perfect solution

A one-time-close loan allows a borrower to combine financing for a lot purchase, construction and permanent mortgage into a single first-position loan. Borrowers who may not have a lot of cash to put down can access low-downpayment financing while locking in a fixed interest rate before the hikes continue.

This can be the perfect solution for those who are able to see a vacant plot of land and visualize the final results. A one-time-close loan provides the financial security of a fixed interest rate, despite the house not yet being move-in ready. These loans also grant borrowers no requalification while they await move-in day — whether it’s a manufactured home, a mansion or something in between.

Although it’s no secret that inflation and supply chain disruptions continue to be huge concerns, they’re also big reasons why people are holding off on mortgages right now. With so much out of the client’s control, providing them an opportunity to lock in a fixed rate before the next bump is one thing a mortgage originator can do to put the ball back in their court.

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For the past 18 months, so many clients have had to sit back and cross their fingers that the next house they bid on will be “the one.” Even worse, they’re sacrificing what would be nonnegotiable items on their wish list in any other climate.

Not only does new construction offer borrowers the opportunity to build their dream home, customized to their liking, but with one-time close, they’re also able to secure an interest rate while they remain near historic lows. By being able to offer alternatives such as one-time close, you’re giving clients a small token of financial certainty at a time when prices everywhere else continue to soar. ●

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Untapped Potential at the Top

Laura Brandao — Thu, 28 Apr 2022 17:00:00 +0000

Did you know that while women comprise roughly half of entry-level mortgage jobs, they account for less than 20% of executive-level jobs at U.S. mortgage, banking and insurance companies? Similarly, while more than 65% of all Realtors are women, females account for only 38% of the nation’s managing real estate brokers.

Reflecting on these statistics shortly after the end of Women’s History Month in March seems striking. For an industry that offers countless positions for women at the entry level, why aren’t more able to climb the ladder in the mortgage world?

Across all industries, research shows that women have what it takes to guide companies through a crisis — such as the ongoing COVID-19 pandemic — and often perform better under pressure due to strong relational bonds, learning agility, communication styles and collaborative abilities. So, why aren’t more female leaders in the mortgage arena?

Career puzzle

Take, for example, a recent discussion with a group of female students at an East Coast university. Despite being highly motivated leaders on their campus, many of these young women still had doubts and fears about entering the workforce in the coming years.

These future professionals have specific priorities when it comes to career fulfillment. And it’s noteworthy that the mortgage industry checks many or all of these boxes. These college students had many pressing questions and goals in regard to their career paths, which are explored below. Today’s mortgage company executives should engage these prized assets and start building the industry’s next generation of business leaders.

“I want to make a difference.” It used to be all about the paycheck, but today’s young female professionals are all about purpose. They want to find a job that makes a positive impact on the world. Mortgages aren’t always associated with mission-driven work, but the reality is that the real estate finance industry is all about changing lives by literally putting roofs over people’s heads — in many cases, making homeownership a reality for families, seniors and others who never thought it possible. It’s truly rewarding to have a client tell you that you’ve enabled them to give their family a home and a future for years to come.
“I want to have a career and a family.” Mortgage careers are among the most flexible in all employment sectors. Long before COVID-19, mortgage professionals of all types were working from home, making their own hours and successfully balancing family life alongside flourishing careers. And it’s an industry with huge income potential, which creates incredible opportunities for women to support their growing families both emotionally and financially.
“The future of work is not in a 9-to-5 office job.” The mortgage industry, in general, couldn’t agree more. Some would venture to say that mortgage companies have been ahead of this trend for decades. Mortgage careers are pandemic-proof. Some of our most successful executives work from anywhere, make their own hours and have completely abolished the concept of a commute.

All of this makes a career in the mortgage industry sound like a perfect fit. So, again, where are all the women?

Deep connections

There’s so much more that the industry can do to communicate the benefits of a career in the mortgage business to the many young women about to embark on their professional journeys — not to mention the thousands of female executives in other industries who may be looking for a career change. Thousands of people became Realtors during the pandemic and it’s past time for the mortgage industry to get the same boost. But how?

The first way is through existing networks. The mortgage industry has a number of highly valuable professional organizations, many of which are being driven by strong female leaders. Some of the resources for women in the mortgage industry include the mPower group through the Mortgage Bankers Association (MBA), local MBA women’s committees, the National Association of Minority Mortgage Bankers of America, the Association of Independent Mortgage Experts, the Women’s Mortgage Network, Women With Vision, and High Heels in High Places. For new professionals, these organizations create strong opportunities for networking and creating deep connections to drive career growth and success.

A second method is greater education. There are many ways for the industry’s future female leaders to continually expand their knowledge about the industry and build fulfilling careers that truly make a difference. Knowledge is power — and that’s the truth.

From classes that focus on different loan options within the industry (such as manufactured housing, Veterans Affairs loans, renovation mortgages and downpayment assistance) to becoming a certified mortgage advisor or a certified mortgage banker, the industry is rich in professional development opportunities. And in true alignment with flexible, pandemic-proof and family-friendly approaches, many training webinars are available on demand.●

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Downpayment Assistance Can Aid Everyday Borrowers

Laura Brandao — Thu, 31 Mar 2022 16:19:45 +0000

The impact of the COVID-19 pandemic has been far-reaching, and when it comes to real estate, first-time homebuyers have been among the hardest hit. The mortgage industry saw an extreme seller’s market in 2021. Desperate to get their hands on the limited inventory available, seasoned buyers with money in the bank competed in a virtual feeding frenzy for homes within seconds of them coming on the market, often presenting cash offers well above asking price.

As mortgage rates dropped to historic lows, refinancing also was a hot product that accounted for a large share of business for many lenders. All of this amounted to having the needs of the “everyday borrower” almost entirely overlooked.

Now, of course, the market is starting to settle. Mortgage rates are inching up and more homes are expected to hit the market. It’s starting to return to a purchase-oriented market. This means that those everyday borrowers are back and they’re ready to claim their piece of the real estate pie. Smart mortgage originators are quickly realizing that it’s time to revisit the options that are available to better accommodate this homebuying audience.

Emerging need

Who is this audience exactly and what do they need? There are many first-time homebuyers and young families out there who are preapproved and can make regular mortgage payments but don’t have the ability to afford a hefty downpayment.

There’s even more to this story, because many of the borrowers who are now ready to buy have taken on a new role since the pandemic began. Some of those who need a little extra help with their downpayment are the country’s most important first responders: educators, military personnel, civil servants, doctors and nurses who have been working feverishly through the pandemic. These borrowers are ready to buy and they need options, so it’s up to mortgage professionals to help them. But how?

To make the right recommendations to borrowers, you should have a deeper conversation about their lives, their families and their overall financial needs.

The good news is that there’s no need to reinvent the wheel. Of course, every lender needs to stay on top of the latest and greatest programs that are available to meet the changing needs of the buyer. But when the market shifts, especially one that has been so volatile, it’s all about reeducation — that is, taking a look at existing loan programs that might offer new opportunities for the current homebuyer profile.

For instance, standard Federal Housing Administration 203(b) loan programs can be paired with U.S. Department of Housing and Urban Development downpayment-assistance grant programs to help the people who are helping the nation’s communities. Some lenders already pair these programs together. Downpayment-assistance programs can offer forgivable grants, but many also offer additional perks.

Due diligence

Downpayment-assistance programs could be a perfect fit for buyers in the new and ever-changing market landscape — but as with any loan program, new or old, finding the right fit is the key. For mortgage originators, this has to start with three critical steps: research, education and communication.

Shop the market. Do your research. Not all loan programs are created equal, even if they do have the same name. Some have a one-step underwriting process while others require more steps, which may be a deterrent. Some require a second loan on the property while others allow for a fully refundable grant of the downpayment-assistance funds. Do your due diligence and find the programs that are a better fit for your clients’ needs.

Education is key. Consider today’s audience. Looking at an existing program through a new lens can uncover unique ways to connect with and support the ever-changing profile of today’s homebuyer. Pairing a 203(b) program with a downpayment-assistance program could be a perfect match for borrowers who are current, retired, volunteer, nonpaid or plan to become first responders, educators, or medical or military personnel, as well as civil servants in a federal, state or local municipality, along with eligible properties located in an underserved census tract.

Communication is vital, especially during the pre-interview. Getting to know your buyer is the first and most important step in the process. To make the right recommendations to borrowers, you should have a deeper conversation about their lives, their families and their overall financial needs. Make it a best practice to look beyond the loan and help a borrower to the best of your ability. Consider what else they’re paying for. Do they have daycare costs? A kid in college? Financial goals for the future?

Go beyond the basic mortgage application to gain a better understanding of what loan is truly right for them. And make sure to avoid jargon and industry speak. Acronyms can be confusing to the borrower, so make sure to break it down.

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The bottom line is, just as housing prices change based on current conditions, loan offerings must adapt to the evolving needs of the borrower. As purchase loans start to reemerge, it’s time for mortgage originators to take a second look at some “oldies but goodies.” They can then differentiate their business and reengage Realtors and borrowers alike. ●

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The Winds of Change

Laura Brandao — Thu, 30 Dec 2021 21:35:49 +0000

Mortgage rates increased at the end of last year, seemingly blown in with the crisp fall air. These higher rates added to the deceleration in home-price growth that was already underway as home shoppers balked at record housing prices.

As rates continue to increase, the number of refinances will likely decline, chilling the demand frenzy that has occurred since the onset of the COVID-19 pandemic. Mortgage originators will need to shift their focus to purchase loan business. Fortunately, tailwinds could be behind this shift in the market.

Pending home sales began rebounding this past August after two months of declines as the supply of properties on the market increased, according to the National Association of Realtors. Entering the new year, contract signing activity is increasingly pronounced in areas of the country where affordability is more prevalent — including communities in the South and Midwest — especially with many workers still able to do their jobs remotely. And the supply of homes shows a stabilizing housing market.

New construction also has begun to increase as lumber prices are finally coming down from their pandemic-era peaks, and construction timelines are improving as ongoing supply chain issues reach a resolution. The Biden administration aims to limit price growth by adding 100,000 affordable homes to the U.S. market over the next three years.

Surging millennials

According to some industry experts, the “coming of age” for millennial homebuyers may be the greatest driver of 2022 home sales. The typical age of a first-time buyer in 2021 was 36, according to Zillow.

More than half of all home-purchase applications in 2020 came from millennials, a first-time occurrence, according to CoreLogic. This share is only expected to grow in the coming years as this generation continues to age into prime homebuying years. Millions of older millennials are getting married, starting families and planning to buy a home.

Although the enthusiasm of those who have been shopping for a home for a while might fade, there are still plenty of new buyers entering the market. And there are many buyers who built up a lot of motivation during pandemic-induced quarantines. They have been waiting for skyrocketing home prices to settle, and they may now be ready to consider renovating a fixer-upper or even purchasing a newly constructed home.

Multigenerational households

At the other end of the spectrum, many baby boomers are downsizing from the large residences in which they raised their families. Some retire and look for smaller properties in warm, desirable destinations, but thanks in part to pandemic-related travel restrictions, many older Americans are moving in with their adult children to be closer to their grandchildren.

In fact, one of the intriguing trends coming out of the pandemic has been the dramatic rise in multigenerational households. The pandemic reshaped the way people see their homes and, in turn, transformed architectural design styles and trends for new and renovated homes.

One of the many things the COVID-19 pandemic has taught is the importance of making the most of time with friends and family, along with the need for well-designed places to connect. Multigenerational home remodels are likely to be a trend that continues to gather momentum, and it includes the need for space designs that offer ways to be together as well as apart within a home. This means that demand for designated home offices and multipurpose spaces are increasing.

Today, the mother-in-law suite — whether it’s a portion of a house that has been remodeled to accommodate a relative, or a smaller, detached “granny flat” — is beginning to see a resurgence with homeowners. According to USA Today, some 51 million Americans now live in multigenerational households, a 10% increase since 2007. One reason why these units are so popular is that these living arrangements allow multiple generations to share in the financial responsibilities that come with homeownership.

Latino wealth

Latinos may not have the wealth of other demographic groups, but as a whole they are the most likely to pool their incomes to buy a house, according to a 2021 report from the National Association of Hispanic Real Estate Professionals. The survey found that 41% of Latino respondents live in a multigenerational household supported by at least three incomes.

Half of these people reported combining all household income to pay for at least some expenses, including rents or mortgages. That’s the highest of any racial demographic in the report. And it’s just one reason that the Hispanic homeownership rate is expected to reach 50% over the next five years.

In another finding which indicates that Latinos are likely to play a major role in sustaining the housing market, more than half of respondents who are renters said they plan to buy a home within the next five years. That’s twice as many as non-Hispanic, white renters. And this trend is even more pronounced among those who own businesses or currently live in multigenerational households.

Supportive legislation

For those who plan to buy a home for the first time, there is a lot of help pending on Capitol Hill. Late last year, lawmakers were debating a $15,000 first-time homebuyer tax credit to spur homeownership opportunities across the country.

Legislation is only one element of a bold housing agenda to combat the housing-affordability crisis while addressing centuries of discriminatory housing policies that have left massive wealth, homeownership and opportunity gaps between white communities and communities of color. Another proposal would give downpayment assistance of up to $25,000 to first-time homebuyers but only those who also are first-generation buyers and are classified as economically disadvantaged.

Yet another bill proposes the creation of a new 20-year fixed-rate mortgage program through Ginnie Mae. This legislation, dubbed the Low-Income First Time Homebuyers Act, would create a program through the U.S. Department of Housing and Urban Development to sponsor low-cost, long-term loans.

As long as a borrower attests to the fact that they’re a first-generation buyer, they are able to apply. According to the bill, Ginnie Mae and the U.S. Department of the Treasury would subsidize the interest rate and origination fees associated with these 20-year mortgages so that the monthly payment would be in line with a new 30-year Federal Housing

Administration-insured mortgage. This would allow qualified buyers to build equity at a faster rate than with a conventional 30-year loan. Additionally, as part of last year’s American Rescue Plan stimulus relief bill, states, municipalities, territories and tribal governments were allotted $350 billion to speed up their economic recovery from the COVID-19 pandemic. Many states provided grants to cities and counties to help fund affordable housing where it was needed most.

The plan provided $10 billion to cover the costs of capital projects such as broadband infrastructure. This capital projects fund took critical steps in addressing the challenges laid bare by the pandemic — especially in rural America and low- and moderate-income communities — and will help ensure that all communities have access to the high-quality, modern infrastructure needed to thrive, including internet access.

Path forward

Economists raised their projections for early 2022, when they expect the impacts of the virus and supply chain disruptions to diminish. The Mortgage Bankers Association forecast purchase loan originations to grow to a record $1.73 trillion in 2022. Home purchases will make up nearly 75% of the market by the end of 2023.

Lenders and originators attempting to differentiate themselves on price alone will not find this conducive to establishing strong client relationships, nor will it produce the referral business needed to successfully navigate a purchase-centric market. After a strong refinance wave that lasted well over a year, it is time to focus on specialty loan programs that will help more borrowers.

Far too many veterans, first-time homebuyers, student debtholders and other prospective borrowers with competitive market bids have lost out on homes due to a lack of tailored mortgage advice. Conventional loans are not a one-size-fits-all solution — and they never have been.

Make this the year that you understand and provide a full suite of loan options to help differentiate your business in the new purchase market. The more niche loan programs you know of — and the more you partner with a lender experienced in processing these loans that will walk with you every step of the way — the more people you’ll help to bring home, no matter their family situation or location. ●

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