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What’s Worrying Mortgage Lenders in 2018?

lendersInflation, which is triggering higher interest rates, as well as the re-emergence of alternative mortgage products are the most pressing challenges for mortgage lenders in 2018, according to a Genworth Mortgage Insurance Industry Survey released on Wednesday.

The survey, which asked industry professionals about their opinion on the biggest challenges that the industry and market were facing in 2018 revealed that 79 percent of the respondents cited these as the most notable challenges for the rest of the year. An additional 17 percent cited loosening of credit standards and 4 percent said excess liquidity in the mortgage market had them worried.

“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,” said Rohit Gupta, President, and CEO, Genworth Mortgage Insurance.

Genworth also asked respondents about what they thought were the best ways to improve access to credit in the mortgage market. Removing legal uncertainty for lending companies originating FHA loans topped the list of improvements with 44 percent lenders saying that it would ease credit access. Lower compliance costs for lenders (33 percent) and adoption of alternative credit scores (14 percent) were some of the other methods to improve access to credit in the mortgage market, the survey found. Around 12 percent lenders also said that more ambitious affordable housing goals for the GSEs would also help.

Speaking of GSEs, 68 percent of respondents said that they had begun to integrate or had already fully integrated GSE Day One Certainty tools into their processes. However, 32 percent said that they had still not begun using third-party data validations on DU/LP loans, the survey said.

The Genworth survey also looked at industry sentiment on the role of compensating factors in underwriting, navigation advancements in loan processing platforms, and GSE Day One Certainty tools. It revealed that 92 percent of industry professionals agreed that given the recent rise in Debt-to-Income (DTI) limits, compensating factors should play a role for an above 45-DTI applicant.

Technology was also a concern for many lenders with 54 percent lenders saying they easily identified with customizable dashboards for organization-wide production management as a top service that they would like to integrate into their loan origination system (LOS) platforms.

Learn more about what's got lenders worried:

Mortgage Lenders Become Frugal as Competition Heats Up

Lenders Remain Bearish on Profit Margins

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika.Ojha@theMReport.com.

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