With a national housing market recovery yet to come, Bank of America is sowing seeds to ensure real estate professionals, homeowners and home buyers have the tools and education needed to succeed now, tomorrow and well into the future.
Pursuing a sweeping, company-wide strategy to deepen its customer relationships, Bank of America is firmly committed to offering mortgage products and making loans as part of its financial menu. Taking a position as a responsible lender eager to help create successful homeowners, the bank is equally firm in its commitment to real estate professionals and the customer experience. The value proposition it offers to real estate professionals is a simple one: a relationship with Bank of America Home Loans gives you access to the tools and resources you need to grow and manage your real estate business, whether that business focuses on the traditional home purchase market or distressed property sales, or both. This holistic approach carries through at every level of the organization.
From senior executive Matt Vernon—who oversees Consumer Sales for the Home Loans business—to divisional and regional sales executives, to the highly trained mortgage loan officers, the group is attuned to local market realities, the importance of listening to the needs of real estate professionals and their clients, and to serving as the No. 1 source for home loan information. The open and honest dialog with the agent community provides valuable insights, and as the mortgage market continues to evolve, Bank of America will continue to listen and solicit feedback.
One on One with Matt Vernon
No one is more eager to talk about housing markets, the mortgage industry and the importance of working with real estate professionals than Bank of America’s Matt Vernon. Here, Vernon offers his insights and experiences traveling the country and working closely with real estate professionals.
What have you gleaned from talking with real estate agents over the last year?
One of the best—and most helpful—things about my job is traveling around the country, talking with real estate professionals, hearing their views on the local real estate market and learning how they have adapted their business to today’s environment. Each encounter gives me additional insight into strategies for success, as well as the challenges that real estate professionals face every day. I’ve been especially impressed by the dedication and tenacity I’ve seen. During this market environment, it would be easy to throw up your hands and resign yourself to stagnating business results. Instead, I’m meeting people with a tremendous desire to grow their businesses. They find a way.
I’ve met many agents who completed certification programs to become short sale experts because short sales now make up roughly 15-20% of the home purchase market. And so, even though short sales can be complex, time-intensive transactions, agents are learning this segment of the business. These same agents are also a great resource for us. They provide incredibly valuable, feet-on-the-ground feedback—both compliments and criticism—that we use to continually improve our short sale process, and ultimately make it smoother and easier for distressed homeowners and buyers of these properties. We believe in a team approach to helping create successful homeowners, and candid feedback from the real estate community is absolutely essential to that process.
On a broader level, I’m consistently asked for more tools and resources that can help agents guide their clients. The mortgage industry has changed dramatically in the last few years. As those of us in the industry continue to get our arms wrapped around the changes, we need to remember that the home buyers and homeowners we work with may not understand how all of this change in the industry impacts their specific experience. Real estate pros are asking us for resources to help prepare their clients, setting reasonable expectations about both the timeframe involved and documentation needed to obtain a home loan today.
Can you sum up the realities in today’s mortgage market?
First, I’d say that there are a lot of misconceptions about the mortgage market and about lenders. From a consumer’s perspective, and that of agents working with home buyers, the single most important “reality” is today’s home loan process and how it has changed across the industry.
As everybody knows, before the downturn, home loans could sometimes be closed in just a few days and often with little documentation from the borrower. Today, industry guidelines for loan underwriting are much tighter from a documentation viewpoint. A borrower must provide very specific paperwork for all assets and liabilities. In addition, lenders closely verify the paperwork, often doing so manually. This makes for inherently longer timelines in the loan process, which borrowers are often not prepared for.
Lenders must continuously implement new guidelines, rules and regulations that they are required to follow, many of which are perceived as tightening overall lending standards. Some lenders, including Bank of America Home Loans, are taking steps to make sure the pendulum hasn’t swung too far while still following the industry guidelines.
You mentioned misconceptions. What are the most common ones?
The one I encounter most frequently is the availability of credit, or the perception that mortgages aren’t really available. The mortgage industry as a whole is on track to reach about $1 trillion in originations in 2011, according to figures from the Mortgage Bankers Association (MBA Mortgage Finance Forecast; release date August 19, 2011; Copyright 2011 Mortgage Bankers Association). That’s lower than previous years for a variety of economic reasons, but most lenders really are doing their best to make every loan they can.
As a group, lenders must follow guidelines from Fannie Mae, Freddie Mac and the government agencies involved in FHA and VA lending. There’s not a lot of room to diverge from those guidelines. But, as I mentioned, some lenders are taking steps. For example, we are trying to look as much as we can at compensating factors and the borrower’s bigger financial picture. We are shifting to a more common- sense approach to underwriting as much as we can.
I think many consumers believe credit is unavailable. They hear negative news reports and just presume they wouldn’t qualify for a loan. I continually remind friends, family and acquaintances that people still buy homes today. They buy for the traditional reasons—marriage, a new job, a growing family. And we lend to these people every day. I firmly believe that the right time to buy a home is when the time is right both personally and financially. If a consumer thinks they are ready, they should visit a mortgage lender to understand how much they can comfortably afford and then work with an experienced real estate agent to find a home in their price range. That’s the advice we should all be sharing with our family, friends, and prospective customers.
What opportunities are misunderstood?
I worry that people may miss their opportunity to buy if they try to time the market. We all read the news reports that predict where housing prices will go. One report says they will rise. The other says they’ll drop. It’s easy for consumers to get caught up in the conflicting stats and then hold off on purchasing a home because they think that prices will drop further and they will save money.
Generally speaking, attractive interest rates are a more important decision-driver than home sale prices. I’m sure there are people out there who, because they are trying to time the market, are missing an opportunity of a lifetime to buy a home at an attractive price and at an attractive monthly mortgage payment. We stress over and over again that the right time to buy a home is when it matches the potential home buyer’s unique life stage and financial circumstances.
Not entirely unrelated are misunderstood opportunities in short sales. According to RealtyTrac data, short sales represented 12% of home-purchase transactions in the second quarter of 2011 (“Short Sales Soar in Second Quarter;” August 23, 2011; by RealtyTrac Staff). This same data noted that the increased volume speaks well of efforts to improve the short sale process. Short sales remain complex transactions that require lots of patience and time to satisfy the many interested parties, such as investors, mortgage insurance companies, other lien holders, etc. It’s no secret that lenders were unprepared for the amount of short sale volume that began to ramp up a couple years ago. Process improvements have been made and continue to be made every day based on direct feedback from real estate professionals. Timelines have improved, but it continues to be an inherently complicated and time-consuming process.
I think when it comes to short sales, home values continue to be misunderstood. Short sale properties are listed at current market value—as any property should be—and simply cannot be sold at “bargain basement” prices. Investors, servicers, homeowners, neighborhoods and real estate professionals all benefit if properties are sold as close to market value as possible. Working together to help homeowners and home buyers understand this concept could really make a big difference in many local housing markets.
What have you observed about the most successful agents you’ve met with recently?
As already mentioned, I meet agents who seize advantages by using as many tools and resources as possible. Nearly all highly successful agents I’ve met stay up-to-date on the full array of loan programs that are pertinent in their local market. They recognize that they are often the first contact a buyer will make when considering a home purchase and that they need to know how to guide that buyer to viable loan options. In some markets, that means understanding 203(k) rehabilitation loans to fix up older or damaged properties. With other buyers, it means understanding what downpayment and closing-cost assistance is available and which lender can help with these programs. In still other areas, it means having a grasp on ways to structure transactions using jumbo financing. Successful real estate pros are also leveraging home buyer education tools, including seminars, online resources and other information, to help their clients prepare for purchasing and owning a home.
What goals have you set for your sales organization in the coming year?
We are focusing intensely on the customer experience. That means providing tools and resources so that agents and buyers know exactly what to expect when working with us. We are committed to helping our business partners better understand today’s loan process, and we work in partnership to set our customers’ expectations. It’s much better for all involved to set a timeline and goals upfront, and our loan officers will work with buyers to clearly walk them through each step of the loan process.
As part of that desire to continually improve our customers’ experiences, we know we need to strengthen our relationships with real estate agents and ensure that we’re communicating with them regularly and providing the right tools to help agents grow their business. Right now, we do this through in-person seminars we host in communities across the country and national webinars on current topics impacting the broader industry. We recently launched our online Agent Resource Center, which builds on the valuable tools already available in our online Short Sale Resource Center. It gives agents a way to easily access loan product and process information on their own. We will continue to look for ways to connect with real estate professionals on a regular basis and we welcome input and feedback.
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