A recent ABA survey found that most mortgage lenders believe the new TRID rules will further restrict mortgage lending. Many say lending was already restricted resulting from last year’s ATR and QM rules. Now, TRID may continue such restrictions and possibly make it worse.
The same survey revealed that banks reported the highest number of mortgages made to first-time homebuyers in the survey’s 22-year history. It also found a decrease in foreclosures and a decrease in the average delinquency rates.
Are the Dodd-Frank rules curtailing lending or are they doing what they were intended to do? Do they force lenders to carefully review the consumer’s ability to repay and completely document the loan to ensure quality and compliance leading to better loan performance? Is bad or good? Is it fewer loans but better quality and performance? Quality vs. quantity.
The ATR and QM rules forced lenders to take a careful look at the borrowers to whom they were lending money. This decreased lending but also increased the quality of the loans they made. This is good for lenders and consumers.
Consumers who can afford to buy and maintain a home are getting loans; many are first-time buyers as evidenced by bank’s increase. Independent Mortgage Bankers are increasing their share of the mortgage market by offering more FHA and low down payment loans while the banks seem to shy away from those loans. Loans are performing better.
Are things all that bad? There are homes being sold and loans to be made. Smart lenders are findings ways to streamline operations to service fewer consumers, with better quality loans, making for better profits and performance.
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There will be some challenges presented by the new TRID rules but none that cannot be overcome with a little hard work, training, teamwork and technology. Opportunities exist; you just need to know where to look and be prepared to take advantage when you find them.