In short, by getting closer to mortgage brokers, agents may be able to help buyers access more portfolio loans.
New Opportunities for Banks
While the formal rules have only been in place since Jan. 1, 2014, the majority of banks have been following most of these standards for the past three years, so for them, the new rules are not earth-shaking.
Franco Terango, divisional sales executive at Bank of America, says, “I don’t feel like there’s a significant amount of change because we have been working with regulators over the past several years and defining what the future state would look like. We have moved along aggressively to ensure we are in compliance.”
Terango advises real estate brokers and agents to align themselves with lenders who have the flexibility to work with buyers who may fall outside of QM lending requirements. “You have to align yourself with lenders who can understand sophisticated tax returns, as well as look at nontraditional credit and savings,” says Terango.
Jonathan Pass, president of Orinda, California-based Mortgage Services Professionals, notes that more players are coming into the business specializing in non-QM mortgages. “Ultimately, this will create more opportunities and more niche lending for the general public. Banks will emerge and fill the missing niches now that the government’s new QM rules have created restrictions,” Pass explains.
Show Your Value
Now is the time for brokers and their agents to get to know the lending market and to get closer to its key players, such as community banks and mortgage brokers.
“It’s important for real estate agents to be able to explain the basics to borrowers, such as how they can structure their finances to be able to borrow,” says Babb. “Refer them to accountants to understand how to structure their income differently. Help them understand realistically that while they can no longer buy the home they could have purchased in December, there may be something one zip code away.”
“At the end of the day, what we all want is to ensure folks have the ability to sustain homeownership,” says Terango.
The real estate industry can certainly get behind that.
Reva Nelson is a freelance writer and marketing consultant based in Chicago. She has been writing about real estate and professional services for more than 15 years. Reva lives with her husband, their two sons, and a Russian tortoise.