March 30th, 2016 | Self-service Mortgages?
The Hershman Group, long-recognized in the Mortgage Industry, reports on 2 key subjects today:
1. CNBC's excerpt below indicates that almost 7 million Americans are not taking advantgage of the low interest rates to lower significantly their monthly mortgage payment through refinancing.
2. Debbie Hoffman, chief legal officer, for Digital Risk, wrote in an email to Mortgage Professional America about the true speed of the new "rapid loan" arena. This is a must read!
1. Rates on home loans have been historically low for several years, but a surprising number of borrowers are still not taking advantage even though rates fell again at the start of this year. How many? Close to 7 million. After the Federal Reserve raised its target interest rate in early December, the common expectation was that rates on home loans would rise. "Global economic shocks then sent investors looking for the safety of U.S. Treasurys, driving down yields on benchmark 10-year bonds. Rates began to fall in defiance of prevailing wisdom, and the refinanceable population grew by 30 percent in the first six weeks of 2016," said Ben Graboske, Black Knight Data & Analytics senior vice president.
By the end of February, 6.7 million borrowers could have saved an average of $3,000 per year, representing a total of $20 billion in potential annual savings, according to an analysis by Black Knight. These borrowers have enough equity in their homes and high enough credit scores to qualify for refinances. "It's lack of awareness of the opportunity, and how to act on it," added Graboske. How much does that translate into on a monthly payment? More than 3 million borrowers could save $200 a month or more; nearly 1 million could save $400 a month or more. Though refinance applications have increased in the past two months, millions of borrowers are still sitting on the sidelines, perhaps unaware of the savings. Source: CNBC
2. Self-service online residential loan services are all the rage, but they don’t quite signal the death knell for traditional originators. Although they may boast lightning-fast origination services, they aren’t immune to the same delays as traditional originators, according to one industry veteran.
“The first large-scale lender to have self-service technology is Quicken. Still, the Rocket Loan has a runway which is similar to other originators and doesn’t take less than 40 days to close even though the application process may be speedy,” Debbie Hoffman, chief legal officer, for Digital Risk, wrote in an email to Mortgage Professional America. “The reason is because Quicken, too, has to comply with regulatory requirements, including TRID, for instance. Reality awaits this potential class of homebuyers.” Still, there’s no question these online originators will put pressure on originators, according to Hoffman... Source: Mortgage Professional America