We just completed our 9th whitepaper called Mortgage 2.0: Eight Post-Recession Sales and Marketing Best Practices for Mortgage Professionals. So much has changed in the last 18 months for mortgage professionals and B2C sales organizations in general. This whitepaper looks at what will be needed to succeed in the transforming mortgage broker landscape from a lead generation and lead management perspective.
We did quite a bit of research through interviews thousands of clients and partners as well as industry experts and have compiled many of the best practices that have worked in this very tough time, as well as providing some ideas about what is likely to come. We encourage you download it free and let us know what you think.
Google has begun to test mortgage leads and refinance leads. Google will no doubt take their time in rolling this out but it creates an interesting new dynamic in the lead generation space.
Here is a round up of some of the buzz going on over the last few days:
While the overall economic trends, including those within the housing sector are heading upwards, There is still some trouble brewing in high end housing markets. The housing crash was felt in the lower end of the market first. Not surprisingly, falling home values where more immediately a concern for houses under $250,000, but with markets rebounding slowly, those owning more expensive homes are increasingly feeling the heat. Only 9.4 per cent of homeowners holding prime mortgages over $417,000 have fallen 90 days or more behind on their mortgage payments. This is significantly less than defaults on the part of subprime holders who are defaulting at a rate of 33.8. However the rate is rising. Additionally, the market for homes of higher values is smaller. The more expensive the home, the narrower the market. Losses in high end home values, often measured in percentage of peak home value, represent greater losses in terms of actual sums of money. These homeowners are in many cases more equipped to weather the downturn, but how these shrinking home values and shrinking demand will affect this population remains to be seen.
Most economists believe the long recession, the worst since The Great Depression, is over. The U.S. economy is beginning to show the growth that indicates economic recovery. The recovery will not be as quick as other steep declines, but in fact, slower and more cautious. To wit: Unemployment is expected to increase again in the beginning of 2010 to 10 per cent, before dropping to 9.5 at the end of next year. The federal deficit is also expected to remain high through next year. Forecasters expect a 3 per cent growth in GDP next year in part to do with improving credit markets, and here’s the good news; the housing market. 2010 is expected to be the first year since 2005 that growth in the housing market will impact overall growth.
Option ARM mortgages, which allow home buyers to make very low payments for the first five years of the mortgage term became widespread in the year 2005. After the first five years, these mortgages ‘recast’, requiring the buyer to make full payments on the principal and interest until the loan is paid. These option ARMs are predicted to set off the next big wave of foreclosures next year. Since they became widespread in 2005, the five year low payment windows will begin to shut next year in 2010. The expected foreclosures are not evenly dispersed geographically or across the continuum of loan values. In fact, these option ARMs were used more commonly in higher cost areas like California. Even within pricier states, these loans are more prevalent among higher loans. It’s estimated that the San Francisco bay area probably holds about 30 billion dollars worth of option ARMs that will recast beginning next year; That’s as high as 1 in 5 mortgages in some bay area cities.
Housing is not going to be the engine to get us out of this recession,” said Robert Eisenbeis, chief monetary economist for Vineland, New Jersey-based Cumberland Advisors Inc., and former research director at the Federal Reserve Bank in Atlanta.
Interest rates have dropped in an effort to incentivize a mortgage re-boom. But it’s not enough for homeowners, who increasingly have their eyes on a 4% interest rate. With mortgage defaults still at record highs. and home prices dropping, it’s becoming ever clearer that there’s not enough fuel in the housing furnace to generate any kind of heat for the economy at large.
With less refinancing going on than expected, there is less extra cash in the pockets of homeowners to be thrown around to reinvigorate the economy. President Obama’s $8000 tax credit is falling short of expectations in terms of motivating people to buy new homes. Freddie Mac estimates 73 percent of the projected $2.7 trillion of mortgage originations in 2009 will be for refinancing.
Without a recovering housing market to single-handedly drive the economy back to health, it seems the economic recovery will consist of myriad efforts, fanning whatever flames can be found in the embers of our erstwhile prosperity.
Sheila Bair, Chairman of the FDIC indicated that there’s still distress in the Mortgage market, to be sure. But loan modifications are having a positive affect. Typically people are willing to stay in their homes and honor commitments even if they are in a state of negative equity. The cases when homeowners are more likely to walk away from a mortgage are when they fall on hard times due to personal issues, like a lost job, or health problems. Loan modifications are not going to be the source of the larger economic recovery but they seem to be enabling troubled homeowners to ride the apparent rising tide of the economic stability.
Ending a two day slide, traders bought insurance and housing stocks as a result of some indications that the housing market may be close to a rebound. The recent slide seems to be the result of jittery investors worries about upcoming quarterly earning reports.
Today a $1.3 billion deal between Pulte Homes Inc. and rival Centex Corp. gave investors some reason to think that the new company, now America’s largest homebuilder was a reason for optimism in the homebuilding sector. The optimism didn’t ripple throughout the rest of the industry as other homebuilders, were mixed.
Insurers enjoyed a bump in sales today in the wake of a report by the Wall St. Journal that the government may be providing bailout funds for a struggling life insurance industry. An announcement is expected as soon as tomorrow.
Homeowners are increasingly falling into delinquency in spite of programs implemented by mortgage lenders intended to prevent further foreclosures.
The report, by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulate mortgage lenders, has shown that in spite of a massive effort on the part of the government and Lenders, it has not been possible to draw a line in the sand and prevent further foreclosures. Moreover, decreasing labor markets are expected to exert upward pressure on foreclosure rates.
The financial services industry has been increasingly focused on Loan Modification, trying to find ways to keep homeowners in their homes. The modifications however have been subject to a re-default rate as high as 58%.
There have been increases in delinquency in prime mortgage holders, which have been considered low risk historically. Also on the rise are mortgages where the borrower is delinquent before making a single payment on the loan. Fraud is considered a possible cause in these cases of delinquency.
As Reported in Reuters, Moody’s Economy.com published a report today with some hopeful news about U.S. housing markets. While the report first predicts declines in home values exceeding 20% in 100 metropolitan areas nationwide, it goes on to predict that the housing markets may bottom out in the fourth quarter of 2009. This depends on the government taking some drastic steps to stabilize the greater economy. It’s been three years since prices began correcting and it appears as though the end may finally be in sight. How this news affects individual communities around the country will vary. New York is only just beginning to see a downturn in their robust housing markets. Meanwhile places like Stockton, California, that had relatively high rates of exposure to subprime and investor lending and have long since hit catastrophic foreclosure rates.