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Survey Finds Proposed G-Fee Increase Will Hurt Originations

NationalMortgageProfessional.com
Nov 20, 2014

Genworth U.S. Mortgage Insurance, a unit of Genworth Financial Inc., has released results from a survey of industry executives conducted at this year’s Mortgage Bankers Association Annual Conference in Las Vegas, which polled 302 mortgage professionals. Key findings showed significant concern about the proposed rise in guarantee fees, among other issues regarding regulation, credit and technology.    

“The survey’s findings were in line with expectations and highlight the need for continued dialogue on regulatory reform and credit access,” said Rohit Gupta, president and CEO of Genworth U.S. Mortgage Insurance.  “It’s important that the industry and regulators strike a balance between enhancing credit risk protection while ensuring affordable access to mortgage credit for first-time homebuyers, low- to moderate-income borrowers and members of underserved communities. It is also important that mortgage technology platforms are updated to facilitate these processes.”

Below are the key survey findings representing industry and lender-specific views.

Regulatory
Almost two-thirds (61 percent) of executives believe lenders today are overly restrictive with underwriting standards, whereas 25 percent believe standards are not overly restrictive, and 14 percent believe the current standards are appropriate. For the lender-specific demographic, 68 percent believe standards were overly restrictive, 20 percent said the opposite, and 13 percent believe the current standards are appropriate. 

Regarding the proposed increase in guarantee fees, 53 percent of respondents believe it would result in fewer loans being closed. An additional 23 percent believe it would increase demand for FHA loans. While 13 percent believe an increase would limit industry competition, 11 percent believe it would increase competition. There were not significant discrepancies between lender and broader industry views on this issue. 

Credit
About two-thirds of respondents (64 percent) believe that low-income borrowers with strong credit do not have appropriate access to credit markets when buying a home.

Regarding financing, piggyback lending (one of the leading causes of severe lender and investor losses during the financial crisis, where two separate mortgages are taken out simultaneously to collaboratively finance one property purchase) has not yet surfaced on the radar of many industry executives, however, more than one-third of respondents (38 percent) are labeling the potential return of this financing type as a threat to the stability of the housing industry.  

Technology
Of the respondents, only 10 percent considered housing industry, as it pertains to loan processing, to be advanced, while 38 percent of the industry believes current industry platforms meet technological standards. Another 40 percent of respondents classify it as below technological standards. And, 12 percent have labeled the industry as technologically outdated.

Lenders were more optimistic than the broader industry, with 14 percent considering their platforms technologically advanced, 46 percent saying they meet technological standards, 31 percent suggesting they are below technological standards, and nine percent labeling them as technologically outdated.   

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