GSE Reform

So the big news late last week came from Washington as the President released some rough details on possible GSE reform. Of course there weren't too many details and specifics on Fannie and Freddie but mortgage bankers did get a few unexpected curve balls that surprisingly haven't garnered as much attention as one would have thought.

Key updates to note:
-Max ltv to be lowered on Agency programs. Expect Fannie/Freddie to require a 10% down payment and a maximum ltv of 90, down from 95. Expect this to push some more volume toward FHA programs.

-Temporary high balance loan limits are set to expire in October. This will mostly affect those in the northeast and California. A re-set from 729k back down to 625k could certainly hurt some regional real estate markets. It would be a little too presumptuous to count on the private labeled jumbo products to support this portion of the market.

-Although you wouldn't think FHA loans would included in this GSE reform, they're party of the party as well. Expect the annual MI premiums to increase by .25% come mid-April; I'm thinking case numbers on/after 4/15 but we'll just wait for the mortgagee letter. This isn't a tremendous increase but it will have an impact on affordability and qualifying and it's just another item for management and IT to implement and track.

Sure there are more immediately pressing issues facing mortgage bankers right now, but these updates cannot be ignored.

Do You Really Use Your LOS?

From some recent discussions, I've come to realize, most mortgage bankers only use about 20-30% of their LOS's functionality. The Loan Origination Systems continue to improve each day. The releases, updates and integrations with business partners are non-stop. Many updates are focused on compliance, but there are other features being built into the LOS's that can help sales, operations, and secondary.

I see most divisions build work-arounds to a process that can easily be streamlined. Others are literally clueless as to the services available simply because nobody sat them down to explain the detailed functionality of the LOS. Over the last few months I've even met a number of bankers who were working in broker-based systems with zero banking functionality. Really? Seriously?

Here are just a few hints that you're likely under-utilizing your LOS:
-Ops department still has racks of files on their desk
-Certain data is manually entered and managed in spreadsheets
-Lock requests and/or file updates rely upon email and phone calls
-Between disclosures and credit/closing packages, you're Fed-Ex bill hit record levels in Q4 '10