Homebuyers and mortgage applicants should breathe easier next month when President Obama signs the financial reform bill. The real estate industry as a whole and mortgage lenders in particular have taken the rap for the questionable lending practices of a few. It has left consumers a little leery but still willing to embrace the American dream of home ownership. Astute real estate agents and mortgage loan officers who proactively embrace the coming financial industry changes will create positive partnerships with prospective homebuyers and position themselves to capitalize on slow but steady growth in the real estate market.
Real estate brokers and loan officers can begin earning the trust and respect of potential homebuyers now by publicizing the new laws on their websites, explaining coming changes in loan practices in blogs and offering information and loan tips in newsletters and buyer packets. Creating an aura of partnership between homebuyers, realtors and loan officers helps to alleviate buyer concerns, promote your knowledge as an industry expert and resource, and establish open communication between all parties that promotes customer trust and goodwill. Demonstrating that you are in the homebuyer's corner and looking out for his best interests will attract buyers and make them feel confident about selecting you to represent them in the purchase of their new home.
Start preparing real estate materials and sales techniques now. Some of the mortgage loan reforms expected to be included the financial reform bill when it goes to President Obama for signature include:
- A new consumer protection agency will be created to protect consumers from poisonous mortgage products, predatory lending practices and scams.
- Uniform minimum standards will be established for mortgages and underwriting practices. Home buyers should expect loan officers to require full documentation of their income and a down payment substantial enough to ensure that borrowers take a demonstrable financial stake in their purchase of a home.
- Prepayment penalties are expected to be prohibited on non-traditional loans that don't carry a fixed rate or standard amortization schedule to prevent the hefty balloon payments and refinance penalties that trapped many borrowers in the recent mortgage meltdown/
- Mandatory arbitration clauses will be restricted.
- Changes in appraisal practices are expected to guarantee appraiser independence.
