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On second homes, baby boomers not acting differently than their parents

National Mortgage Professional
Feb 26, 2007

Homeowners want sophisticated loan products, survey saysMortgagePress.comResidential mortgage loans What U.S. homeowners look for in a mortgage loan and what they want to achieve through home financing may be two very different things, according to a new survey sponsored by Thornburg Mortgage Inc., a single-family residential mortgage lender focused principally on the jumbo segment of the adjustable rate mortgage market. While most mortgage originators would not be surprised to learn that homeowners looked for lenders that offered a traditional fixed rate term (71 percent) and competitive rates (65 percent), what was enlightening was that homeowners expressed a strong interest in loan products that offered more sophisticated features, such as loan modification options, pledged asset loans, and assumable and portable mortgages. The survey was conducted from June 16 22 among a national probability sample of 1,162 adult homeowners (568 men and 594 women). The nationwide survey revealed that when homeowners were given a description of how a loan product functions, in most cases, the majority of them indicated that they would use a mortgage that offered those options. For example, when the survey participants were asked if they would ever use a loan product that let them change the terms of their loan without refinancing, a loan modification option typically offered by portfolio lenders, almost three-quarters of all homeowners (74 percent) indicated that they would. Nearly six in 10 homeowners (59 percent) indicated that they would use a loan that let them transfer their current mortgage to a new property, e.g., a portable mortgage; and 56 percent of homeowners indicated that they would use a loan option that let them transfer their current mortgage to a buyer—an assumable mortgage. Additionally, one in four homeowners said that they would use a pledged asset loan, a mortgage product that let them use stocks and bonds in lieu of a down payment. "It used to be common wisdom that if a mortgage originator offered a traditional, 30-year, fixed-rate mortgage with a competitive interest rate, the clients would be ripe for the picking; but according to this survey, that's clearly not the case," said Thornburg Mortgage's Senior Executive Vice President and Chief Lending Officer Joseph Badal. "Many of today's homeowners have a sophisticated perspective on money and they are interested in loan products that help them achieve their financial goals, which could include more than financing their home—even if they may not know what specific products to ask for." Badal's conclusions were further supported by the survey, which reflected that when homeowners were asked if they understood specific mortgage products by name, many didn't. Only 21 percent of homeowners believed they understood what a loan modification was. Less than two in 10 homeowners (18 percent) said that they understood portable mortgages, and 15 percent understood pledged asset loans. Badal added, "What's clear from this survey is that in today's competitive marketplace, mortgage originators that take the time to explain how specific loan products work and how those products can benefit individual borrowers are the lenders that are most likely to grow their origination business." For more information, visit
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