Throw a dart on to a map of the United States, and you are likely to hit a hot housing market. From coast to coast and border to border, values are climbing and available stock is low. With so many buyers so desperate to purchase, mortgage professionals need to be prepared to serve customers with the right products, the right way. That includes understanding the Federal Reserve’s Regulations X and Y.
For instance, when you’re dealing with escrow accounts and higher-priced mortgage loans, you must understand how to create and maintain them under the Truth-in-Lending Act, explains Chrys Lemon, an attorney specializing in financial services law, in his live webinar for Eli Financial, “Escrow Requirements for Mortgage Loans: A Detailed Refreshers on TILA and Regulations X & Z.”
Strong Economy Puts Michigan & Texas on the Map
Across the nation, home prices rose 5.7% in 2017, notes Barrons, with the most brisk action happening at the lower-priced end of the market and the key driver being low unemployment.
Hot spots: Orlando is looking at 7% growth in home prices, while Nashville is expecting 8%. Other white-hot markets include Seattle (5.8%), Raleigh (5.3%), and Denver (6.2%), where the local economy has an unemployment rate of just 2.9%.
But it’s not just the perennial favorites that are seeing growth. Home-selling site Trulia notes that Grand Rapids, Michigan is poised for success thanks to its low vacancy rate, low median age, and low unemployment. Same goes for El Paso, Texas, which has a high percentage of young, single residents plus year-round sunny weather and a vibrant downtown.
Deeper-Debt Trouble Lurks
While tight supply and high demand are pushing home values, the flip side is that borrowers are taking out ever larger mortgages, notes the Wall Street Journal.
“Roughly one in five conventional mortgage loans made this winter went to borrowers spending more than 45% of their monthly incomes on mortgages and other debt,” the paper noted.
Good news: Property information and analytics firm CoreLogic noted in a report earlier this month that while mortgage amounts are up, delinquencies are down—for now. As of January, the company reported, 4.9 percent of mortgages were in some stage of delinquency, which is down 0.2 percent from January 2017.
“Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market,” the company noted.
With Values Up, So Is Equity
The Washington Post noted that Americans are currently “awash” in equity, which is opening options for homeowners. According to the latest Federal Reserve estimates, homeowners control more than $14.4 trillion in equity, up by nearly $1 trillion during 2017.
All that equity, the Post noted, could be used myriad ways—take a vacation, buy more property, or start a business—although choices that require borrowing against the equity will only add to the property owner’s debt.
“These are crucial financial decisions, but the abundance of equity is giving large numbers of owners options they didn’t have before,” the Post noted.
Although the market is not perfect, it’s not showing signs of slowing down. That, says Lemon, is why lenders need to be up to speed on TILA and other mortgage compliance rules.