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MBA, One of Many Knowledge Resources

Written by Posted On Monday, 27 October 2014 14:40

Buyers and sellers dealing one-on-one with mortgage lenders and real estate professionals can forget the full force of industry knowledge available to these front-line financial workers. Problems can arise if these professionals also forget.

In our "just Google it" society, consumers still need the professionals they hire to possess a depth of working knowledge that is continuously refreshed and strengthened by research and education. Band-Aid searches are not enough to achieve the best possible results for real estate buyers and sellers.

Do the professionals who help you bring the full power and impact of their industry to support you in achieving your short- and long-term real estate goals?

How are you sure that the professionals helping you buy or sell real estate take full advantage of the information, knowledge, and professional development education made available through the trade associations and regulatory organizations they and their organizations belong to?

For instance, The Mortgage Bankers Association (MBA), a national association representing the real estate finance industry, which employs more than 280,000 people in virtually every community in the country, represents more than 2,200 real estate finance companies from Main Street to Wall Street: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. Headquartered in Washington, D.C., the MBA strives "to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans."

On October 21, 2014, The Mortgage Bankers Association announced that it expected to see $1.19 trillion in mortgage originations during 2015, a seven percent increase from 2014. While MBA anticipates purchase originations will increase 15 percent, it expects refinance originations to decrease three percent.

MBA's forecasts purchase originations will increase from $635 billion in 2014 to $731 billion in 2015. In contrast, refinances are predicted to drop from $471 billion in 2014 to $457 billion next year.

In 2016, MBA is forecasting purchase originations will increase to $791 billion while refinance originations drop to $379 billion, to a total of $1.17 trillion.

"We are projecting that home purchase originations will increase in 2015 as the US economy continues on its current path of stronger growth, job gains and declining unemployment. The job market has shown sustained improvement this year; with robust monthly increases in both payroll jobs and job openings," said Michael Fratantoni , MBA's Chief Economist and Senior Vice President for Research and Industry Technology. "We are forecasting that strong job growth, coupled with still low mortgage rates, should translate to an increase in home sales and purchase originations.

"Our projection for overall economic growth is 2.9 percent in 2015 and 2.4 in 2016, which will be driven mainly by strong consumer spending and business fixed investment, as households continue to spend on durable goods, such as cars and appliances, and as businesses invest in new plant and equipment. Moreover, after several years of contraction, the rate of government spending should no longer be a drag on the economy."

On October 20, during MBA's 101st Annual Convention & Expo in Las Vegas, MBA Chairman Bill Cosgrove publicly released the following remarks to MBA members, based on lessons learned during his 28 years in mortgage banking:

While every year we lead our corporate planning retreats to strategize for the success of our companies' futures, it's no longer enough. I'm here to tell you the largest planning retreat is happening to us in Washington and the state houses. And it's imperative to the success of your business and our industry that you are fully engaged in both! By working with the national MBA, I came to realize that what was happening in Washington was affecting my company inside our four walls just as much as it was outside the four walls. The future of my business was being determined by strangers - political leaders and regulators, well intended, but they don't know our [mortgage banking] business….With policy proposals stuck in Washington's political gridlock and regulations affecting our ability to best serve our customers, we all need to be in the game and we all need to stay in the game.

Growth in the housing market is limping along because the new generations of home buyers won't or can't jump in. They have seen firsthand the devastation of the recent economic crisis—high unemployment and record levels of foreclosures. Scarred by that experience, facing growing levels of student debt, and a soft job market, they are hesitant to go "all in" on homeownership. Others who are ready to buy simply can't, because the complicated web of federal regulations prevents us from providing them full access to credit.

The next year [2015] will be about access to credit and the collective impact of the new rules and enforcement regimes on consumers. Access to credit for qualified borrowers, especially first-time home buyers, is

imperative to market growth and stability. And it's the main thing that is affecting today's housing market. Today first-time buyers represent only 29 percent of the market, when traditionally this has been closer to 40 percent. The real estate market will not be healthy until first time buyer numbers start to substantially recover!…I never thought I would see the day that young Americans question the value of homeownership. Each and every one of you [MBA members] should take this personally. I know I do!

One of the greatest factors limiting these potential homeowners is rising student debt. A recent study from TransUnion found that student loans have left the greatest imprint on consumers in their 20s. Student loan debt, as a percentage of their overall debt, has tripled in the last 8 years, from 12.9 percent in 2005, skyrocketing to 36.8 percent today. And here's what shocks me the most! For the first time in my career—student debt is having a profound downward effect on homeownership. Until we find a solution to that problem, homeownership among recent college grads will continue to flounder ffecting everyone in this [MBA Conference] room.

I believe policy education is a two-way street. We have to learn how to comply with the rules, but federal officials also need to learn of the impacts of their decisions and actions on consumers, the housing market, and access to credit. Right now, there are too many cooks in the kitchen. Regulators who oversee the mortgage market aren't coordinating, and it's driving up the cost of homeownership. Or worse, taking homeownership out of reach for too many Americans.For example, in the first quarter of 2009, it cost lenders about $3,700 to produce a loan. By the first quarter of this year, those costs had more than doubled to about $8,000 per loan—costs that are ultimately paid by borrowers. We need smart, effective regulation that promotes responsible lending but doesn't impede the recovering housing market.

Real estate and mortgage professionals benefit from information, knowledge, and education provided by their trade associations and regulatory organizations. For instance, The Mortgage Bankers Association's NewsLink Publication Series provides weekly relevant news coverage and analysis for its mortgage banking members. How do the real estate and financial professionals who serve you keep themselves up to date with mortgage market shifts relevant to your real estate?

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