Stalled mortgage reforms may stay stalled until 2017, according to a Freddie Mac executive.
Mark Hanson, the government-sponsored enterprise’s senior vice president of securitization, told the New England Mortgage Bankers Conference that Freddie’s legislative experts have told him Congressional action on such proposals as the PATH Act and the Corker-Warner bill may not happen next year or even the year after that.
His was one of several pessimistic voices about the national and regional mortgage outlook at this years New England Mortgage Bankers Conference, held in Newport, R.I. and organized by the Massachusetts Mortgage Bankers Association.
William Mullin, president of NE Moves Mortgage, of Waltham, Mass., said his regional firm had estimated its purchase mortgage business would be up by 5% this year. Instead, it is down by 4% in number of units, although sales prices have remained firm, he said.
“It’s going to be difficult for a little bit,” he said. Adding in the huge drop in refinancing volume this year, his firm is down 40% in originations year over year.
Mullin said mortgage volume, the direction of interest rates, and regulatory burden, especially new Real Estate Settlement Procedures Act and truth-in-lending regs going into effect in August 2015, are his three main worries for 2015. But there are others.
He also worries about how to keep his core group of loan officers intact during tough times, and the pressure on margins from competing on price with other lenders. “We’re constantly cutting prices to keep a deal,” he said.
Michael Fratantoni, chief economist for the Mortgage Bankers Association, said the national mortgage picture for this year mirrors the New England regional one. The MBA estimates of production for this year are just a little bit above $1 trillion for the year, down from $1.8 trillion in 2013.
He also sees consolidation pressures and an increase in costs lenders are incurring. On the servicing side, the cost to service a loan per year has jumped from less than $100 to $210. And production costs have jumped from around $4,000 per loan to $7,000 as of the second quarter.
Fratantoni isn’t totally pessimistic, though. He said he sees hope for a mortgage thaw next spring, as positive national macroeconomic trends help out a housing and mortgage recovery. These include a healthy level of job creation and an ongoing drop in unemployment.
“I’m more optimistic about next year than I have been in a long time,” he said.