There’s been a lot of talk already about what to be prepared for this year, but I think there’s a key area that’s missing. We can talk all day about the trends we expect to see in 2022 — what’s going to be more popular and what’s going to go away — but the fact of the matter is, those who want to be successful must be prepared for anything.
With your goals set for the year, it’s time to go back to the basics and brush up on all your products, even the ones that may be less popular, in order to ensure you can deliver for borrowers of all types.
Know Your Products
Sure, you know your popular products up and down, inside and out. While that is good, it is only a start. It’s time to take a look at your entire product inventory and think about ways you can serve unique borrowers or solve for any challenges the industry may be facing.
Adjustable-Rate Mortgages (ARMs): While the MBA reports that only 3.4% of purchase transactions were ARMs in 2021, that may change in 2022 with fixed rates forecasted to increase. So, how much do you really know about adjustable-rate mortgages?
The past several years, less than 10% of mortgage loans were adjustable rates, so you might not have paid these products much attention, but adjustable-rate programs are changing. Do you understand how these new programs work?
We have a new index, secured overnight financing rate (SOFR), that will be commonly used to recast future interest rates. The SOFR ARMs may come with a six-month adjustment period rather than an annual change.
Are you able to communicate to your customers how these ARMs work and how they may be beneficial to them? It may be time to read that Consumer Handbook on Adjustable-Rate Mortgages (CHARM) booklet and refamiliarize yourself with how they work. Also, review the timing of the additional ARM disclosures, as these may differ according to how the application was received. Check in with your Compliance Department for guidance. Whether you see a lot of ARMs or not, it is important to understand them well so you can effectively communicate all options to your borrowers.