A Decade Post-Recession: A New Mortgage System
- Dec 06, 2017
The mortgage crisis that started in 2007 played a significant part in the recession and its consequences continue to manifest today. Traditional lenders are still waiting for clarifications on high-volatility loans, while alternative financing companies are gaining larger shares of the market. Kirsten Paul, a licensed Florida mortgage broker and CEO of Florida-based GLORIUS Corp., revealed how the mortgage system changed in the past decade and adapted to the new conventions in the industry.
How did mortgage companies function during the last recession?
Back then, it was much easier than today. There were fewer regulations and more options to offer creative loans.
How has the lending environment evolved since 2007?
The lending market has definitely bounced back. There are currently many options available (and seem to be evolving regularly), but gone are the days of 100 percent financing and negative amortization loans—which is good.
What are the main changes in the lending environment triggered by the recession?
Today, there are more solid qualifying terms and more stringent guidelines with the Dodd-Frank Act and regulations. Lenders are now strictly regulated when it comes to licensing requirements, call reports, disclosures and deadlines.
How would you describe the lending environment today?
Stable: there are plenty of program options for all types of buyers and even some great programs for non-residents and foreign nationals (non-U.S. citizens). There are a lot more available now than in 2009-2010. Also, in the Florida market, besides becoming more and more international, we are seeing many more Baby Boomers relocating and fewer first-time homebuyers, due to Millennials, applying for loans.
When it comes to mortgages and real estate lending, what do you see going forward?
(I see) a little more flexibility for programs than in the past 10 years, but not like prior to 2007. Most recently, the Federal Housing Administration has lowered its credit requirements and new programs have been released for those with bankruptcies or those who are self-employed.
During your career in real estate, what have been the most significant predictions made about the industry?
One of the biggest would be about the low interest rates and how long they would stay, and we are still seeing very low interest rates 10 years later.
What are your predictions for the industry going forward?
The industry is growing and expanding with new avenues for investment and obtaining mortgages such as one-to-one, peer-to-peer and crowdfunding for mortgage loans. There are exciting platforms where all borrowers can get no-documentation financing on investment loans.
Image courtesy of GLORIUS Corp.