It is December 2011, and another year has flown by. As I am sitting here planning for 2012, I must reflect on the year that has passed and all of the changes that have occurred in the mortgage world.

Dodd-Frank Bill
The major influence on our world this year was the passing of the Dodd-Frank Bill. The idea behind the bill was noble - increase transparency to the consumer and to make it a simpler more straight forward process. Sounds good, right?  Unfortunately, the opposite has occurred. Today, instead of looking at a one page Good Faith Estimate, the consumer has a THREE page document to review and interpret. From a Bank’s perspective, processing and underwriting has become more laborious and tedious in that banks are far more concerned about adherence to compliance first so that the government will buy the loan from them, while the merits and strength’s of the consumers application has become a distant second.

Today's Consumer
A consumer applying for a mortgage today will notice the mountain of paper work that needs to be signed upfront, they will also feel the burden of having to supply inordinate amounts of paperwork in order to qualify for financing – that folks, is the “new normal” in the mortgage world. These so called “improvements” to our industry may have helped some politicians gain votes but (not a political statement here) it has certainly NOT helped our industry NOR the consumer. My hope is that in 2012 some common sense will return to the industry, the pendulum that has swung so far to the right may start to return to the middle again, a middle that has a foundation in common sense and allows an underwriter at a bank to look at a borrower’s credit worthiness and not be stuck in the bureaucracy of compliance regulations.

Mortgage Rates
Since the end of 2008, - December 28, 2008, to be exact, interest rates started to dip. As a result of that dip, we have seen three years of heavy refinance activity in the mortgage industry and 2012 isn't anticipated to be any different. I have been saying for the last two years that rates have to go up - but fortunately, I have been wrong on the timing of the inevitable rise in rates. The majority of economists are predicting that 2012 will be no different than the last three years when it comes to interest rates, and we can expect rates to remain at these amazingly low levels. Additionally, I am seeing signs that the requirements for Jumbo Mortgages – loans above $625,000.00 – are becoming less restrictive. Some lenders have reduced their “post closing reserve” requirements and Jumbo money “ARMS” (adjustable rate mortgages) have interest rates that start in the high 2% range.

I am predicting that in 2012 we will see slight growth in the local housing markets and that the “new normal” of supplying more paperwork in order to get mortgage financing will ease up in the latter half of the year.

Happy Holidays to you and your family and have a healthy and prosperous 2012.