Insiders believe the chances of this rate hike are running at just above 50% (Rates). Wait, that also means there’s about a 50% chance that rates won’t rise. What do you think?
We knew that rates wouldn’t stay this low forever. Let’s face it, we had a great run and processed quite a few refi’s over the past few years. Now, we need to concentrate on the purchases. According to recent reports, home sales are on the rise, bolstered somewhat by the FHA premium cut, low down payment programs from the agencies and an easing of credit by banks on jumbo loans.
Could a slight rate hike be just what we need to get the Millennials off the fence? Maybe others, who may be standing by waiting to see when the rates hit bottom, will take the plunge. That could be soon. If so, we may see a sudden influx of new potential buyers into the market looking to buy before rates rise even higher. That could be very good for mortgage lenders.
The challenge is that this rush could come at about the same time as the new TRID and FHA changes. Increased business is a good thing, but as we found out during the refinance hey days, if we’re not prepared, this could create major operational issues for any lender. It could create problems that could quickly turn potential profits into real life losses and give the industry another black eye – just when we’re starting to recover.
Rates will rise sooner or later. When they do, the refi’s will dry up. But, purchase business will at least initially pick up. Are you ready to handle it, especially in light of the upcoming TRID and FHA changes?
Do you have the systems in place to ensure compliance and timing with TRID requirements? Keep in mind the 3-day rule for the receipt of the new Closing Disclosure by the borrower prior to their closing. No more last minute changes; no more getting the loan approved, locked and to the table the day of closing. Change is coming and it’s coming soon, very soon. You need to be ready.
This is not to scare you but to sound a warning bell. It’s not just two new forms; it’s a whole new way of doing business. When rates start to rise that will become a little more challenging.
Are you’re underwriters trained on the new FHA guidelines? Are your systems and staff ready for the new forms? Are you prepared to perform pre-closing audits on all agency AND FHA loans?
So much to do, and so little time. The game is changing and you need to play different. Don’t punch a gift horse in the mouth…