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They were all the rage — then the scourge — of the housing boom and bust. Now they’re back, big time: home mortgages that require tiny or zero down payments from buyers. So how well are these mortgages performing? United Wholesale Mortgage says its version has experienced no delinquencies since its debut last summer. Results such as this are possible, the lenders involved say, because 1 percent and zero-down offerings are conservatively underwritten. United’s minimum FICO credit score is 720.
UWM Senior Vice President of Operations Andrea Hall was selected by HousingWire as a 2017 Rising Star, representing the best young leaders in the mortgage industry – in lending, servicing, investing and real estate. Leading a team of 300 people, the 31-year old guided her team to improve efficiency and output by 50%, a major factor in UWM’s company-record $23 billion in loan volume. Andrea also had the honor of being featured on the cover of HousingWire’s June magazine issue.
According to a 2017 online survey from Michigan State University and United Wholesale Mortgage (UWM), Millennials are eager to put down roots and enjoy the “freedom” that comes from homeownership—with 95 percent of those surveyed saying they are actively saving for a purchase, and 90 percent planning to buy within two years.
Mat Ishbia, President and CEO of United Wholesale Mortgage, spoke with MReport on how mortgage lenders and brokers can adapt to the changing climate. According to Ishbia, the industry is not in the same place it was just five years ago, and drastic changes are sure to continue into the coming years. How has wholesale mortgages changed, and what can we expect in the future?
Although a lot of Millennials rent apartments or rooms, more and more seem to be buying homes, too. Even though the thought of doing the latter may seem intimidating, it doesn't have to be.
"Most Millennials aspire to be homeowners," Ishbia says. "A lot of what Millennials fear regarding homeownership is the unknown — things like the process and the qualifications associated with buying a home. They get misinformation from people about how much of a down payment is needed to afford a home."
United Wholesale Mortgage CEO Mat Ishbia says, “People don’t know about this, we have to educate them—that’s our job in this industry.” He continues, “Educate consumers, educate the Millennial generation, educate everybody—they actually think they need to save 10 or 20% down, that’s why they’re over there renting.”
What’s even worse, says Ishbia, is that many millennials aren’t even aware of what they don’t know. Fourteen percent of millennial potential homebuyers are not familiar with what a mortgage broker is, while 37 percent have heard about brokers, but have no idea as to what they do.
Millennials are expected to make up nearly one-third of the buyer pool in 2017, which should be another solid year for purchases. Mortgage brokers have a great opportunity to do more business with home-buying Millennials in 2017, and will be an easier task than one might have expected. It comes down to educating them on the mortgage process and why brokers are the best option, as opposed to overhauling their mindset. It is more a matter of coaching them through the process and dispelling myths versus giving them the hard sell.
"Nobody likes the mortgage. They want to buy the house," said Mat Ishbia, CEO of United Wholesale Mortgage in Troy.
But Ishbia said many millennials could benefit from researching their mortgage options first before shopping for a home.
He noted that the Fannie Mae HomeReady program only requires 3% down for creditworthy low- to moderate-income borrowers. The Freddie Mac Home Possible programs can require 3% or 5% down, depending on the program, for low- to moderate-income buyers or buyers in high-cost or underserved communities.
Closing times continue to shrink, however according to United Wholesale Mortgage CEO Mat Ishbia, that’s still not good enough.
Ellie Mae recently came out with a study that showed closing times for March were the fastest they’ve been in more than two years, since February of 2015. At 43 days, time to close dropped from 46 days in February.
Ishbia points out that 43 days is a long time, and gives lender the opportunity to market themselves to real estate agents and buyers by offering platforms that can close a loan in even 30 or 35 days.