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Uncharted Waters

Keeping first time homebuyers competitive in the market

Tara Healy
Tara Healy
Uncharted Waters

Homeownership. It’s a simple word, yet it represents so much for many. Homeownership means much more than owning a structure built with wood, nails, and drywall. For most, it’s a feeling that produces an emotional response like no other. It’s a symbol of autonomy, accomplishment, and the opportunity to build generational wealth. It’s easy to understand why the goal of homeownership is indeed an integral part of the American dream. But is achieving this dream in jeopardy?

A recent article from reports that housing inventory “has fallen dramatically since the pandemic,” from 1 million active listings to just a little over 400,000 between January 2020 to January 2022. Interest rates have increased sharply from last year as well, significantly impacting a consumer’s buying power. Home prices have also increased which has diminished consumers’ ability to buy. In fact, National Association of Realtor (NAR) Senior Economist Nadia Evangelou recently projected that nearly 13 million households will be priced out of buying a home this year.

As mortgage professionals, we have a unique opportunity to serve our customers and help them realize their own American dream. But how do we do this effectively in today’s market? How do you serve your community and keep your business afloat with higher mortgage rates, high home prices, and the current economic environment? What happens when first-time homebuyers are having issues qualifying for a mortgage or competing with other homebuyers?

I had the opportunity to pose these very questions to an amazing group of professionals. Their responses not only provide insights on what they’re doing but deliver a message of hope. Like true mortgage professionals, we are a nimble bunch and are experienced in adjusting our sails. I hope you enjoy reading these perspectives and can glean insights that will be useful to your business.

Cindy Ertman

Cindy Ertman

CEO & Founder of The Defining Difference and Mortgage Master ProFrom my tenure in the mortgage industry and working through many changing and challenging markets, I believe we are back to a normal interest rate market. The last two years were an anomaly and were a gift for those who were prepared for the opportunity. The key to our mortgage success is to be able to adapt and manage the fear when our markets change. This is definitely a changing market, but still a very low interest market, if we look at mortgage rates historically. Our clients have to qualify for their mortgages today and there is a great lack of inventory and a great number of potential homebuyers seeking homeownership, so I do not believe we are in a housing bubble, nor do the mortgage analysts that I follow. I still believe strongly that if you can qualify for a mortgage, that you should try to get in the game. Real estate is still the number one wealth building asset in the US. I sold a home many years ago because some of the top Realtors in my market told me we were at the top of the market and interest rates were rising, so I sold my home. Today that home just sold for 5X what I paid for it and I kick myself for selling it. As a very wise analyst told me many years ago “time solves timing problems in real estate.” So, I’ve lived by that for the last many years, and it has served me well.

Cindy Ertman, CEO & Founder of The Defining Difference and Mortgage Master Pro

Jen Rasmussen

Jennifer Rasmussen

PhD., and vice president and head of thought leadership at SitusAMC Insights

The current mortgage environment is incredibly competitive, presenting challenges for both borrowers and lenders. Amid record low inventory, housing prices are up about 15% compared to last year. A sharp uptick in mortgage rates since the beginning of the year will further eat into potential homebuyers’ ability to afford a home and increasing inflation will hinder the ability of first-time homebuyers to save for a down payment.

SitusAMC Insight’s national single-family affordability Index has fallen precipitously since the start of the pandemic; homes are the least affordable they have been since 2007. Yet, owning a home is still more affordable than renting nationwide, as multifamily rents began skyrocketing in most metros in the middle of 2021. This lack of cheaper alternatives is helping to stimulate demand for single-family homes in an already tight market.

By expanding the box to support non-traditional borrowers, lenders can better serve their communities and their bottom line. Non-QM loans open up homeownership to a broader group of individuals, including self-employed and gig economy workers. Borrowers, especially first-time homebuyers, can potentially benefit from wider credit score and down payment requirements. Expanding product type menus allows lenders to increase their offerings and better pivot toward changing market conditions.

Jennifer Rasmussen, PhD., and vice president and head of thought leadership at SitusAMC Insights

The challenge for lenders is being able to efficiently navigate these more complex, non-traditional loans. The low-rate environment and strong refinancing activity have fueled the mortgage industry for the last few years. However, these transactions are typically less complex and mostly employ basic underwriting practices supported through automated underwriting systems. The demand for manual underwriting significantly increases on non-QM loans but requires underwriters with extensive knowledge and expertise who can better understand risk profiles.Many lenders may now need to look outside their organizations to find such underwriters. Partnering with organizations who understand how to navigate this environment not only expands their market base but also can increase competitive advantages through increased service level agreements and turn times in this hyper-competitive housing market.

Dawn Ryan


Dawn Ryan

Senior loan officer (NMLS #828476) with Embrace Home Loans in Middletown, RI

We are navigating uncharted waters right now without the right equipment or even a baseline knowledge of what equipment, maps and charts are needed. Still, we’ve had similar financial cycles in the past which can help give some guidance on what lies ahead in the future.

There are a number of variables impacting the financial and housing markets today. The financial and psychological ramifications of the pandemic continue to surface. For many people, there have been shifts in lifestyles, as well as their employment and housing situations. People are looking for more security, especially when it comes to housing. They are seeking a piece of the American dream of home ownership at an almost unprecedented rate.

Inflation and the inability to get goods and services are also influencing consumers’ mindsets. The lack of housing inventory and the stepped-up demand for houses has caused not only home prices to increase in many parts of the country — rental prices are going up as well.

I best serve my community, my customers and business partners by staying in regular communication regarding products, rates and market shifts. There is no such thing as too much communication and education in the mortgage business and that’s particularly true during these trying times for homebuyers. I also am a firm believer in being prepared for different scenarios.

Dawn Ryan, Senior loan officer (NMLS #828476) with Embrace Home Loans in Middletown, RI

When it comes to qualifying my customers, I regularly update my buyers’ income and assets, especially when rates go up, as any rate increase may have an impact on their borrowing power. I work closely with Embrace Home Loans’ other departments to learn about any new loan products or changes in current products that might be coming down the road. By doing so, I’m always prepared to give my customers the best home financing options for their individual financial needs. I think it’s also important to have a plan B for my customers, whenever that’s possible.

Above all else, I listen carefully to my customers to validate their feelings and learn about any stresses they may be encountering in the homebuying process. Good communication with my business partners is equally important. I assure my customers and my business partners that we are in this together until we reach the finish line. There are days when they are looking for a confidante and friend more than a loan officer. I’m happy to be that person.

People today are just stressed out in general, often because they are starting to reconcile the significant emotional toll that the past two years have taken. Combine that with going through one of the biggest transactions of their lives and a very tough homebuyers’ market and it’s easy to see why people are pretty stressed out. So, if my customers or business partners want me to mow their lawn or fold their laundry or go for a long walk with them, I’m in! I’m happy to do whatever is needed to keep my customers and business partners in a good frame of mind. After all, the mortgage business is first a people business, and I never lose sight of that.

This article was originally published in the Mortgage Women Magazine May 2022 issue.
Tara Healy
Tara Healy,
Chief Compliance Officer

Tara Healy is the chief compliance officer for Cherry Creek Mortgage, LLC.

Published on
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