Collingwood Group Mortgage Outlook Report: Mortgage and Housing Industry Professionals Hopeful but Cautious Over Relaxed Mortgage Rules

December 07, 2014

Survey also Finds Business Conditions Improving in 2015 and Calls for GSE Reforms

(Washington, DC) — A new survey finds close to 70% of mortgage and housing industry professional responding to the Collingwood Group’s Mortgage Outlook Report were hopeful that relaxed lending rules will help stimulate the industry.

But, comments from respondents show that support for FHFA’s announcement of a low down payment mortgage option was fairly nuanced. Many industry participants felt the announcement was a positive sign because it reflects concern of policymakers with current market dynamics and indicates a willingness to ease standards. However, most respondents acknowledged that other high loan-to-value (LTV) products exist and that FHA offers the best option in this space.

For example, one respondent wrote, “The announcement of a low down payment mortgage option may create more opportunities for buyers to afford housing; however, it falls short of appropriately loosening tightened credit standards for other LTV loans. The 97% allows the GSEs to capture loans that would otherwise go to FHA.” The real question with FHA is whether the insurance premiums will be reduced this year to attract new business and better balance the fund.

Housing and mortgage professionals are hopeful of an improving housing market in 2015. The six-month outlook is up from October to November with 64 percent of respondents reporting that they expect business conditions to be better in the next six months. Several lenders attributed the slight improvements in the market to a more stable and consistent purchase volume. One respondent who cited improvements in the market explained that, “QM and ATR have affected our ability to sell loans on the secondary market and directly to Freddie Mac which has increased our portfolio production by 25% this year.”* Those who are less positive mentioned that they are experiencing a lower average loan amount and more underwriting challenges.

Plus, many respondents feel strongly that Fannie Mae and Freddie Mac’s current state of conservatorship cannot be continued, although there are mixed feelings about the future role of the GSEs.

A full copy of the survey can be downloaded here:

About the Collingwood Group

The Collingwood Group is a Washington, D.C.-based business advisory firm. It was founded on a single idea: To help clients grow and protect their businesses.”

The team includes the former head of FHA, the former head of Ginnie Mae, and additional partners who have held senior leadership positions in HUD, Fannie Mae, Freddie Mac, and other major financial services organizations. Clients range from the Fortune 50 to small and mid-size businesses, with a strong concentration in financial services and technologies.

Services include: identifying and securing business opportunities with the federal government and the GSEs; helping financial services companies comply with, interpret and operate effectively within the ever-changing regulatory environment; and working directly with CEOs and boards of directors to help increase market share and profitability.