? by Mike Sharkey
Staff Writer
On April 25, there were three and a half pages of mortgage deeds listed in our sister publication, The Daily Record.
Many of those mortgage deeds are carryovers from the warranty deeds list. However, many of them are refinancings of existing mortgages, a growing trend across the country in virtually every section.
The reason for so many refinancings is pretty simple: mortgage interest rates are some of the lowest in history. But the rates alone don’t explain why on April 25 there were 428 mortgage deeds listed.
The number of people doing mortgages, the streamlining of the process and the Internet all play roles in one of the most explosive real estate-based industries in the nation.
Brad King, a mortgage broker with Branch Bank & Trust, agrees there are several factors at work, but near-record interest rates are dictating the industry.
“The recent market has been active the past six to nine months,” said King, who’s been in the business for 13 years. “The interest rate has dropped below six percent. There has been record numbers of 30-year refinancing going on around the country.”
While most of King’s business revolves around new homes sales, his company is a major player in the re-fi business.
“Corporately, we are the 11th-largest bank in the country,” he said. “We’re in 13 states on the East Coast. Our predominant volume is in re-fi, as is the case with most lenders. I just read today that this past week was the first decline in the number of refinancings in a number of months.”
Low interest rates are creating a boon for the real estate business almost across the board. With the exception of the rental market, Realtors and mortgage brokers are finding more work than the hours of a day will allow.
In real estate, the demand is met by new Realtors entering the work force. In the mortgage business, King says companies often hire to accommodate the increased business. The way things are going, those folks may have jobs for a long time.
“What lenders do is staff up to accommodate the loan volume,” said King. “There are ebbs and flows. Companies expand then contract after the slowdown. Different companies are starting to establish new offices in Jacksonville.”
Jim DelVecchio, president of Homesouth Mortgage, believes too much is being made of the recent boon in home buying and refinancing. Despite the fact his company is posting record numbers, DelVecchio says the trend doesn’t surprise him and he expects business to continue to grow.
“Every builder and Realtor is having a record year,” said DelVecchio, who has been in the business for 25 years. “Last month [April] we had the biggest closing month ever. And the month before that was the biggest ever.
“This is not unusual. This has been going for 15 years. It’s just perpetuating itself. This is status quo.”
Where DelVecchio says he is struggling is finding good help to handle the influx of business. Right now, he’s looking for mortgage brokers, but the process isn’t easy.
“The problem is there aren’t many qualified, experienced people out there,” said DelVecchio. “They don’t exist. I hired a temporary broker a year ago and she’s now full-time. I’m looking to hire about 10 new people, but not all at once. I may take the rest of the year. I will not hire bodies for the sake of having a body in the office.”
Like most every other facet of life, the Internet has entered the picture. What used to be a complementary information source, the Internet has become a way to do everything from pay bills to earn a degree to find long lost classmates.
You can also refinance your home.
According to King, Internet mortgage companies come in all shapes and sizes. And, there’s an element of risk when putting personal information on the world’s information superhighway.
“Like any business, there are those on the up and up,” said King. “Certainly, some are reputable. Considering the size of the U.S. mortgage industry, the Internet has not grabbed a huge share of the business, but some of it.”
King says the Internet is certainly a productive way to shop for a first or second mortgage. The process is actually pretty simple — as long as you log on armed with the right information — and the true beauty is you can take the process as far as you want without committing or wasting anyone’s time but your own. However, two factors make Internet mortgages risky and detached.
“There are security issues, but it’s gotten better than in the past,” said King, explaining that a ton of personal information is required to process the Internet application and there’s no telling who else has access to that information despite privacy assurances from Internet mortgage companies. “Plus, it’s remote. You can’t see anyone, touch anything or ask any questions.”
Without question, Internet mortgage companies have cut into the business of people like King. However, with interest rates so low and record numbers of new home buyers and those refinancing, in a convoluted way King believes the Internet actually helps the mortgage broker business.
“The buyers come having done their homework,” said King. “They have experimented with refinancing on the Internet. If they go to close and it’s not what they expect, they can walk away.”