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FHA Changes, Jumbo Loans and Low Appraisals: A Lending Update

by Chicago Agent


Colleen Bara
Senior Vice President
Home Loans – Retail Regional Manager
JPMorgan Chase


Q: What are the biggest trends you are seeing in the market?

A. We are seeing more multiple offers on properties, rising prices in some markets and shorter time on the market for homes. The cycle time of listings is accelerating overall, which is giving us a good sense of optimism. Distressed homes are still part of the mix, but we do see the number of them declining.

We are also seeing more first-time buyers. Potentially, as first-time homebuyers enter the market, they can help drive inventory down and put upward pressure on prices, which could be a good thing for long-term price appreciation.

One thing we’re doing to really focus on that segment of the market is education workshops and, of course, one-on-one prequalifying meetings. This helps customers have a thorough understanding of what they qualify for and any other options that are available to them, like down payment options where they can put less money down or how they can have the seller pay some of the closing costs. And, we’re excited to see that many customers are choosing to educate themselves first by attending our first-time homebuyer workshops, where they spend more time learning what is involved in the homebuying process and making sure they understand what’s involved to make certain they are making the right decision. Sometimes a Realtor is present to go through the different aspects of selecting a home and what’s involved on the Realtor side, but they are generally hosted at branches across the region. One thing that we teach that is especially important is what customers should consider when budgeting for their new home. They learn what it takes to afford a home, and all things that apply, not just the principal and interest, taxes and insurance but also the expenses for upkeep of the home. The best way to help prepare for homeownership is for potential buyers to meet with a mortgage banker. A lot can be done with education and understanding of what they can afford.

We are also seeing borrowers take advantage of refinancing and enjoying improved cash flow. There have been continuous opportunities for customers to refinance. Fiscally, since 2009, Chase helped 1.8 million people refinance.

Q: How do modifications play into this, and what does that mean for the market?

A. Modifications are still very much needed to stabilize home values and help buyers pay and remain in their home – similar to refinance and purchase requests, modifications are borrower-specific. We make certain that borrowers connect with their mortgage servicer to walk them through their eligibility for modifications and modification options. From 2009 to 2011, we doubled our number of employees to help our customers stay in their homes.

Although we are continuing to have modification requests, I believe we are starting to see recovery, and I do believe we’ve hit bottom. The amount of delinquencies and modification requests has gone down, so our optimism keeps moving forward.

Q: What do you see happening within the next five years? What needs to happen to loosen requirements in the next few years?

A. It is difficult to predict interest rates because there are a number of influences not related to the housing market that can drive them higher. What we do know is that interest rates will increase, we’re just not sure when. Housing has never been more affordable though, and we are working on programs for our customers to capitalize on opportunities in the market. In order for requirements to loosen, more buyers need to come to the table with their credit in order. We always tell customers to focus on what they can control – they should make certain they maintain an excellent credit history and an excellent credit score, the two biggest factors of qualifying for financing. If this is made a priority, more homebuyers would be more successful or more likely to have more options when applying for financing.

Q: Is there anything else that JPMorgan Chase is currently focusing on?

A. We have a relentless focus on customer service and the customer experience. Especially in this environment, we want to set realistic expectations for what’s involved, why documents are needed and set the right timeline for how long it will take borrowers to refinance or to close a purchase transaction. We have more than 11 million customers who visit a Chase branch on a quarterly basis. You never know when a customer will be ready to buy, so we focus on talking to customers and educating them so that when they’re ready, we’re ready to help. We use a number of approaches to keep in touch – email, online advertising, homebuyer workshops and one-on-one consultations with mortgage reviews to determine if they are, in fact, at the best place to buy and/or what their opportunities are to save money. They might not be buying tomorrow, but when they’re ready to buy, six months to a year from now, with our education and help they’ve been getting from us, they feel good about working with us to obtain their mortgage financing.

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  • Ryan Rahim says:

    I’ve been trying to get my FHA buyer into a lot of buildings, but it seems that most high rises do not want to renew for FHA. I wish they would renew FHA in all the buildings that once had them.

  • Lester S "Lester the Lister" says:

    It is not always that they don’t “want” to…..they may no longer qualify due to factors like a high % of rental units within the bldg, a high # of distressed properties and or delinquent assessment payments or other financial issues.

  • PB Jones says:

    Interview the appraiser? Are you kidding me. Good luck with that. The lender hired the appraiser, not the broker. It’s not the brokers’ business unless they are willing to face the same competency grilling to determine their skills in Comparative Market Analysis and to determine if their commission and seller expectations were taken out of the listing price. Lenders want impartial, independent and objective opinions of value, which is why they hire the appraiser. Low appraisals are frequently more a case of brokers’ inflated list prices.

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