This past February I attended an interesting meeting conducted by Union Bank. They were promoting their EOM program which I have discussed in a previous blog and my March Newsletter.
One of the speakers was a man named Gary Acosta. He sits on the Board of the newly created Consumer Financial Protection Bureau. Mr. Acosta discussed the final regulations which were published on January 21, 2013, the safe harbor provisions that exist for lenders, and the impact on potential litigation exposure for officers and the institution itself.
What caught my attention was a particular statement he made. If I may paraphrase: ” 80% of the mortgage market right now is refinance. In a few years, this will flip to 80% purchase mortgage – not refinance – driven by realtors.”
Many observers of the real estate market have expressed concern about where housing will be when cash investors leave. Since prices have been at historical lows, opportunities have been boundless for individual and bulk cash buyers. As prices rise, however, a point will be reached where these buyers will be uncomfortable investing the cash required. If lending standards remain tight at that point, what kind of housing market do we have? Do prices turn around again if buyers can’t buy?
No-one knows of course what the future holds. Mr. Acosta seems to feel that as the market continues to shake out, and as uncertainty in these financial regulations becomes more clear and settled to our lending institutions, we may finally have a semblance of normalcy or certainty in our housing market. If and when this happens, it should be all systems go for real estate agents who have been frustrated and suffering through the pains of the housing crisis the past few years. List a home, find a buyer, buyer gets a bank loan, transaction closes, seller moves out, buyer moves in. A beautiful, simple thing!
I hope he is right. Uncertainty has stifled consumers, small business owners, and lending institutions. And hey, if the buyer is a quality buyer who just misses out on qualifying for a bank loan, the seller can offer to carryback the note with sound terms that protect both parties. He can enjoy the income or visit the marketplace and sell his note to a professional note buyer.
