Every week, we ask an Boston real estate professional for their thoughts on the top trends in Boston real estate.
This week, we talked with Amy Tierce, regional vice president of Wintrust Mortgage.
Boston Agent (BA): Fannie Mae and Freddie Mac announced recently that they could be lowering the down payment requirements from 5 percent to 3 percent. What impact, if approved, do you think this will have on the home buying market?
Amy Tierce (AT): There has been an interesting back and forth in the mortgage blogosphere with some people wringing their hands and saying that we’re reverting to the behaviors that initially set off the real estate bubble and crash, and others saying that response is overblown and that 3 percent down offerings will be a savior for our housing market. I don’t believe that 3 percent down offerings will be negative, but I’m not sure that they will bring us a real estate boom either.
There have been low down payment programs available for the entire post-mortgage meltdown period, with the exception of a few months where most programs other than FHA, USDA and VA were requiring 5 percent down or more. State bond programs and FHA, USDA and VA have all been offering low down payment lending for years – mostly successfully. This is not the relaxed lending that got us into trouble, today we are required to fully document income, keep ratios limited to the program requirements; we also have higher credit score standards. Down payment is only one part of the lending review process. In the past we were offering no money down programs with no income documentation and poor credit scores, a recipe for loan failure for sure.
How much 3 percent down programs will impact the greater Boston market is yet to be determined. While I think it will help a bit, our home prices are just too high in many areas. A 3 percent down payment is going to have greater benefits in markets that are more affordable to start with. However, with our high home prices many potential buyers will find it easier to come up with 3 percent versus 5 percent down. Additionally, this change could help in areas where we have older housing stock. A lower down payment could allow for more cash on hand for the buyer looking to engage in home improvements.
BA: Our most recent cover story discussed innovations in real estate tech, and what’s proven effective and what hasn’t. Have you incorporated technology into your business, and if so, what and how has it helped, if at all?
AT: I try to spend time going to real estate events, conferences and programs rather than mortgage industry events, because I realized I should be paying more attention to what real estate people are learning so that I can serve them better. What fascinates me is how much technology is being marketed to Realtors – tools for every aspect of their business. Realtors are fully independent contractors who aren’t as regulated as mortgage bankers are, so there is a bigger market of sales and efficiency software and apps to the real estate industry. In the mortgage industry our greatest technology need is our Loan Origination System, we are looking to enhance and speed up the process utilizing our systems for taking loans, locking loans, communicating with borrowers, ordering appraisals and title services etc. We have apps for consumers and realtors to help them determine payments and costs in a snap. We utilize CRM software to be sure we are on top of our client communication and developing loyalty with each transaction.
BA: Getting a mortgage loan is a major commitment, which is why borrowers like to know they’re working with the best. What has Wintrust, and specifically you, done to market yourself?
AT: Although a top lender in Chicago, Wintrust is brand new to this market. Our marketing strategy is pretty low tech; we are spreading the word as though we are running a political campaign, shaking hands, kissing babies and showing up at events, programs and parties. Before we started our marketing efforts we wanted to be sure we knew how to deliver a fabulous customer experience with Wintrust so we stayed under the radar until we closed loans and had a complete grip on our process and had permanent office space. Our marketing force are our loan originators and our happy clients and referral partners, so hiring great and well respected loan officers is step one, creating a fantastic consumer and realtor experience is step two, once perfected then we started to shout about our accomplishments and approach on Facebook and LinkedIn and promote ourselves through events, blogging and simply being in the field and telling our story.