Current Challenges Facing the Mortgage Industry and Ideas on How To Start Fixing Them

 

 

Written by: R. Peirce Cook, Jr.

Cell: 301-919-0030

 

 

Challenge

­          FNMA/FMHLC/FHA/VA all provide Government loan programs supported by all US taxpayers, yet qualification is being made difficult for even the most credit worthy consumers because of obscure guidelines.

Solution

­          Attention needs to be focused on reducing current pricing adjustments, creating flexibility for borrowers who barely miss certain criteria, and allowing more flexibility for those who are the most credit worthy.

 

 

 

Challenge

 

­          It appears that no company, agency, or person is analyzing this complex problem and applying new innovative ideas to find solutions. Everyone seems to be looking at the current loan options and trying to cram the same struggling American borrowers into the same old loan programs.

Solution

 

­          Develop FNMA/FMHLC/FHA/VA loan programs with new extended terms and competitive pricing.  Basic loan terms should be extended to 40 years at attractive rates and upside down borrowers should be refinanced as such with new affordable terms. The new terms that extend the loan should come with deed restriction/liens that tie the property and future equity so nobody is receiving a free ride.

 

 

 

 Challenge

­          FNMA/FMHLC/FHA/VA guidelines are so specific that if a consumer is on the cusp and does not fit into one of the predetermined black and white tranches they are denied a loan and provided with no follow-up or other alternative except waiting and going through the process from start to finish all over again.

Solution

­          Allow consumers that are on the cusp of qualification for a loan program to accept a lien on the property so they can complete the refinance – develop predetermined repayment terms and offer this lien/financing at a nominal rate to be paid to the government and deductible on ones tax return. When the property ownership is transferred the lien must be repaid or transferred to the new owner.

 

 

 

Challenge

­          Consumers are not willing to commit to banks/lenders and want to shop around for the best deal and banks and lenders are spending time, energy, and resources to service consumers who are shopping. The media armed with miss information is exacerbating the problem.

Solution

­          If banks are willing to commit and give an approved consumer the desired rate, then the consumer must commit to the transaction by pledging assets with the bank (i.e. purchasing a 3 or 5 year CD with an early withdrawal penalty) which would allow them to qualify for TARP subsidized rates and loan programs.

 

 

Challenge

­          Consumers are confused by the process and there are too many barriers for people to obtain accurate information and most lenders are not well prepared to meet the public's needs.

Solution

­          Mandate that banks and lenders put policies and procedures in place that help consumers get the correct information, and guarantee all fees and costs associated with a transaction completed under the newly established program.

 

Challenge

­          The average consumer has no avenue to get into a traceable and accountable system to receive follow-up once their loan application has been denied by a lender. If you are upside down on your mortgage or falling behind on your payments you are simply out of options.

Solution

­          Create and maintain a National Registry for Mortgage Help, to be overseen by the Government, where people can enter their information and ask to be contacted regarding their specific mortgage situation.  Banks and lenders will participate in the National Registry and be held accountable for consumers with which they do not provide follow-up. This should be a mandate to banks who are receiving TARP funding.

 

Challenge

­          There is no established program or policy requiring people who refinance using Government supported loan programs to make investments in their complete an energy weatherization, to upgrade their home's energy efficiency, tied to the new loan financing.

Solution

Include an energy inspection requirement as part of the appraisal process, and require completion of all energy upgrades financed by a loan before any deed restriction is released.