When more than 3,500 people gathered in Chicago recently for the Mortgage Bankers Association's annual convention, the most since 2007, there were a lot of acronyms thrown around and a lot of concern expressed about the direction of residential lending.
Amid all the industry-speak emerged a few key takeaways for consumers:
Mortgage originations will rise in 2013. But refinancing activity will fall off during the year's second half.
Economists for the trade group estimated that modest economic growth, more sales to owner-occupants (versus cash sales to investors) and a small boost in average home prices will drive a 16 percent increase in mortgages written for home purchases, to $585billion. Meanwhile, refinancing transactions will drop to $785 billion, down from an estimated $1.2 trillion this year.
Mortgage bankers are nervous. There's a lot of uncertainty in the market and a lot of still undefined terms like qualified mortgage and qualified residential mortgage that won't get firmed up until early next year.
Mike Heid, president of Wells Fargo Home Mortgage, spoke of that ambiguity in an interview.
"There's no question there's a huge level of uncertainty in the marketplace right now, and uncertainty makes it more difficult for people to do their jobs," he said. "In the lending space, when you have high levels of uncertainty in the marketplace, it does have a chilling effect on extending credit."
During the convention, Heid was equally blunt with his feeling that the forthcoming rules, designed to make sure mortgages are being given to people who can afford them, have swung the pendulum too far. He likened it to when a teenager totals a car and his parents ground him for life.
The American Action Forum, a public policy group, recently estimated that combined, all the new regulations would result in 20 percent fewer loans than otherwise would be made, up to 1 million fewer housing starts over a three-year period and 3.9 million fewer jobs.
Renting is roaring. Investors are scooping up distressed suburban homes to turn them into rentals, and the majority of multifamily construction now going on is apartments, not condominiums.
Does it have any lasting effect on children whether their parents rent or own a home? Yes, say researchers who presented a paper during the convention. The study concluded that after accounting for factors like parent education, the high school dropout rate of children living in owner-occupied homes was 2.6 percentage points lower than for children living in rental homes, while the teen birthrate was 5 percentage points lower.
The researchers found one circumstance where it made no difference to children's lives whether they lived in a rented or owner-occupied home. That was when the homeowners made no down payment at all. The size of a down payment didn't matter, just that there was one.
Hardest-hit funds. Since early 2010, the federal government has allocated $7.6 billion to homeowners hard hit by the housing crisis in 18 states and Washington, D.C. But as of June 30, states had spent only a limited portion of the $1.5 billion they've drawn down under the various hardest-hit programs to assist borrowers, according to the latest quarterly report by the Office of the Special Inspector General for the Troubled Asset Relief Program.
Nationally, as of June 30, $506.6 million of assistance was provided to 58,519 homeowners. As of Sept. 30, according to the report, Illinois had drawn $96.5 million of the $445million it was allocated and as of June had assisted 2,814 homeowners with almost $32.4 million in aid.
Since then, the pace of the state's program has picked up. On Monday, the Illinois Housing Development Authority announced that a Bloomingdale resident was the 5,000th homeowner in the state to receive up to $25,000 in hardest-hit funds to help him keep his mortgage current despite losing his job. Since its start in September 2011, the fund has committed almost $114 million in mortgage payment assistance from the Treasury Department-backed program, which is set to expire at the end of 2017.
"People can apply for this program," said Rebecca Boykin, a spokeswoman for the Illinois Housing Development Authority. "Money is still available."
mepodmolik@tribune.com
Twitter @mepodmolik
