Stay informed about mortgage lending

Ron Haynie, ICBA senior vice president for mortgage finance policy and executive vice president for mortgage services, says staying informed is the key to riding the mortgage market waves and maintaining great customer relationships.

By Ellen Ryan

IB: What do you see in the mortgage market for the rest of 2017?
Ron Haynie:
This should be a good year, with about $1.62 trillion total mortgage loan production.
Housing inventory is still tight, but there will be growth from increased new housing starts. Existing homeowners are more confident in putting their homes on the market, because property values have improved considerably. And finally, there are a lot of programs out there to help finance that home purchase. I’m a parent of millennials. Three of them became homeowners in the past year with three different programs. That tells me you can get a loan.

IB: What’s affecting housing now?
The economy continues to perform well, and people have jobs. The Trump administration intends to be pro-growth. Property values are up from the Great Recession, and mortgage rates are very affordable, even though they have risen over the past few months.
Current rates are in the low fours, which to me, with a long memory, is amazing. Credit-ready borrowers should be able to get financing, and community banks are ready to prove it.

IB: Potential buyers hear ads saying, “Borrow now! Rates are rising!” How do we combat consumer anxiety?
You do a lot of counseling work. Ten years ago, you might have closed a home loan in three weeks. Now, it’s 40-plus days. New rules and regulations that are designed to help borrowers better understand the mortgage transaction also slow down the process. So manage expectations. If a realtor tells the buyer they can close in two weeks, tell them that unless it’s an all-cash deal, they really can’t. Mortgage guidelines are so complex now. Community banks have to make sure their staff are trained and knowledgeable about program requirements.

You destroy a lot of credibility when you have to go back to the borrower several times, rather than tell them up front all the things you’ll need. Constant communication is not just good customer service; it’s critical to success. Borrowers want to know the status of their loan, so simple calls or messages such as, “We got your pay stubs today; now we’re just waiting for your W-2s,” go a long way. Don’t go silent or they’ll think, “Did they get it? Is it okay? Is it not okay?”

IB: How should staff stay informed about the shifting marketplace?
Most do it via webinars and online learning. There are so many sources: Fannie Mae and Freddie Mac, the Federal Housing Administration, the Department of Housing and Urban Development, and ICBA all do a lot of training. Some of the larger correspondent investors, vendors and mortgage insurance companies provide training on their programs and products. Regulators also provide training and information. The FDIC just put out an outstanding, comprehensive guide in a consistent format (Affordable Mortgage Lending Guide: A Resource for Community Bankers).

IB: How should well-informed bankers pass on that knowledge to customers?
Most mortgage customers are not familiar with all of the mortgage jargon, and a lot of what you say will go over their heads. You need easy-to-understand brochures to send home with them that outline the terms and define the abbreviations and acronyms. Likewise, invest in a functional website that’s more than your hours and locations. Make the effort to provide easy-to-access content about the mortgage process, and keep it current. Community banks that enable the borrower to apply online will have a competitive edge over those that don’t.

Community banks have a great opportunity to leverage those customer relationships here. Technology helps you stay compliant. It also helps you improve the customer’s experience with your bank. The result is you’ll make more loans. But you do have to invest in that technology and mortgage business.

IB: With so much regulation, some community banks have given up on that.
Unfortunately, that’s true; some community banks did get out of the business. However, lately we are hearing some say that they got out too soon and have realized that they may have abandoned a good and profitable line of business. If banks get out of everything that requires training or technology, what’s going to be left?

Maybe, instead, you should invest in a new loan origination software system that automates the process, provides online customer access and improves compliance. Or seek out other firms that can assist in the processing and underwriting of the loans but will still allow you to maintain the customer connection. There’s always going to be regulation. Lending money for a home—that’s a way to cement
a customer relationship.

IB: Why will borrowers come to community banks for mortgages?
One, we’re in the community. We’re connected, trusted and work with local businesses, including most local builders. Millennials like that; after all, they like local causes, farmers markets and small businesses.
Two, we can offer a full mortgage product line. This includes mortgage programs that meet a variety of borrower needs to smooth the process. For example, some folks like to deal online rather than walk into a branch. Okay: With D&H Mortgagebot, a community bank can offer the same kind of online and mobile technology as some of the largest national lenders.

Three, we have great personal service. Mortgages are complicated and stressful, so people want to work with someone they know. And even if they do everything online, they like feeling they can come in if there’s a problem, or they can drop off paperwork. We’re a comfort zone.

Mortgage resources

ICBA Community Banker University:
The FDIC’s Affordable Mortgage Lending Guide:
Fannie Mae’s Quarterly Compass Newsletter: