State of the Mortgage Market - QM (Qualified Mortgage) and ATR (Ability to Repay)

QM (Qualified Mortgage) and ATR (Ability to Repay ) have arrived.  Effective today, January 10th, 2014 - the Dodd Frank Act piece of legislation on mortgage reform arrives and with it comes the new rules that will have an impact on mortgages moving forward.

Some of the main changes that have come down:

• Most mortgage will need to meet the criteria as follows:
• Max DTI ratio of 43%
• ARM loans must be 5 years in length or more
• No Interest Only loans
• No Fees in excess of 3% of the loan amount
• Minimum of 2 years Required Income information (Tax Returns, etc.)

Here is a great article that explains the impact to the consumer:  http://files.consumerfinance.gov/f/201309_cfpb_ability-to-repay-rule_what-it-means-for-consumers.pdf

Some of the highlights:

1. On ARM Loans - must qualify at the highest rate the ARM can adjust to
2. No loan terms longer than 30 Years
3. No Balloon Payments - where a large lump amount is due at the very end of the loan or during the loan period.

Overall, the market has been moving towards these items over the last few years - so while there will be an impact - over time, these moves are best for the mortgage industry.  The idea behind lending or financing a home should never be to over-extend oneself to the point where they find themselves unable to pay their mortgage (due to a program and notwithstanding an unforseeable event such as death, long term loss in job, etc.).

Change is difficult, but some change is necessary.  For the safey of the consumer and for the betterment of our industry, these rules have been put in place. 

H - Homeownership

The final piece in our philosophy.  H is for homeownership.  We are in the business of financing the most important (and largest) transacation that most people will have in their lifetime...and we don't take that responsibility lightly.  It's immensely important that we always remember that we play a huge part in ensuring a successful outcome for all of our clients.  If we fail to remember this, then we have missed the point.

H - stands for Homeownership.  We take pride in being able to hlep people complete the most important financial transaction they will ever have.

It can be about the commission, it can be about the prestige, it can be about being the best - but when it's about those things and not about the client, then something will most likely go wrong.  How do we keep it about the client?

1. Communication/Teaching - Sure not everybody wants to know the details of what we do, but they do need to know that the file is important.  We show them it is important by communicating weekly the status of their home loan so they will rest easy that the home will soon be theirs.  When we run into snags, we find the solution and work the borrower through the process to reach the solution so they don't have anxiety.  We make sure they know what is going on and we are kind and considerate understanding that a lot is on the line. 
2. Being Honest and Having Integrity - In the spirit of being honest - it's not always that easy.  It's easier sometimes to not make the "bad news" or "tough news" phone call  and instead opt for an impersonal email.  It's easier to ignore a red flag, then to be honest with what the borrower may be facing early in the process to make sure they know what may happen.  And in short, it's harder to be honest and have integrity then it is to be the opposite.  However, that is what we are called to do.  We stay honest, humble and gracious in order to help the client know we mean to work with them and not against them in the transaction.  In the end, the borrower should never fight their mortgage lender to secure the home they want to buy. 
3. Listening to what they Need  - We have all been there, the sales guy across the table or on the phone, not hearing whatever it is you are telling them.  All they hear and see is that you are a potential sale or closing that earns them money.  They have missed the boat...you don't need to buy the biggest house on the street, you don't need to do a 30 YR Fixed loan because you want to pay the home off in 15 years, you don't want an ARM program to drive the rate down.  You want what you need and it's our job to help you work through your desires, wants and needs and find the right solution for you.  If it was about us and our team, then we wouldn't listen.  But it's not - it's about you, your family, your finances, and your new home.  So we listen and we help direct you to what fits you.  That's the key to listening.

These are but snapshots of how we work to help the client.  But most importantly, a wise man once told me, the real estate process is full of anxiety and we are defined by whether we help reduce that anxiety in the transaction or foster it's growth.  We work to reduce the anxiety, because with transactions that have so much meaning - if we don't, then we missed the point.  And missed it entirely.

Here's to continued homeownership for many clients in 2014 and beyond.

F - Is for Family.

I am going in reverse order - but it keeps things interesting.  Homeowners Financial Group USA, LLC - is committed to delivering 3 key concepts withing our business.  They are creatively crafted out of our initials...H...F...G.  Last week I spoke about the "G" and giving back and today the "F" - Family.  It's thrust comes in who we hire and how we do business.

F - Stands for Family.  We hire only likeminded individuals who value our family style culture, treating other employees like family members. 

The idea is that we are a family: working together for the goal of growing in every aspect of what we do.  This growth can be seen in the way we originate loans, in the strength of our numbers and in the way we lead in the industry.  This plan for growth allows a truly cohesive family to emerge where each individual wants the best for each other member and gives respect in each of their defined roles.  At HFG, we experience that daily as we strive for each LO to excel to their highest potential and each member, from Quality Control to President, to know they bring value to the overall experience of all our clients.

As our customers, you are a part of that family.  As soon as you begin working with a LO - we understand you deserve the respect, understanding, and care to be given just as if you were an immediate family member.  We know how important it is to feel wanted, needed, and ultimately respected by all parties in the transaction and so we value each client in a way that brings them into our family.

This is a goal that is not without merit and it's also a goal that is sometimes hard to achieve.  All families struggle, fight, and disagree - but the families that stay together and unite for a common purpose, achieve a great deal more than those who don't.  Sure we have our disagreements, sure we have difficult situations that we have to work through, but more importantly than that - we believe in each other and what each person means to our company.  All we work to do is extend that family feel to our clients.

So as you share your lives this week with family, whether near or far, remember that we value each other and our clients, the way you value the time you spend with yours.  Our goal is to be more than just a financial piece to your puzzle...it is to be the family that stands behind your needs and works to help your reach your dream of homeownership, debt free living, investment building, or whatever you choose to do with real estate.

In short, thank you to the team of people I work with at HFG - I couldn't do what I have done to this point without their love, care and support.  And thank you to my clients, who have allowed me into your family and thus have joined our family at HFG - without each other, it would make for a much less enjoyable experience.

From our Family here at HFG to all our extended Family clients - Happy Holidays and Merry Christmas!