“Most lenders today are slowing down – it’s flat or even or even a little bit down compared to where they were last year – and we’re not,” said Carl Markman, director of national sales for REMN Wholesale. “I was questioning it myself and looking at statistics, and I found out that the FHA
volume has come down a little bit, VA
volume is going up, and USDA is relatively flat. But what’s happening in our world is that we, over the last six months or so, have really been pushing the renovation products – the 203k
’s, the HomePath. It’s a significant part of our business right now. Last month, it was about 10% of our overall business. So without that, we probably would have been flat or a little bit down like everyone else. The renovation business – that’s the piece that’s really taking off. … Right now, we already have over $10 million in new file submissions this month just on renovation loans. Just in the first handful of days in the month.”
But why are renovation loans charging ahead when many other products seem to be standing still? The answer, according to Markman, is aging inventory.
“I inquired with a lot of real estate agents in different parts of the country, and also loan officers that worked for broker companies. It seems that the inventory that’s out there right now that realtors have to work with is old and dated,” he said. “So depending on what part of the country you’re in, you might see a 60s ranch (house): a little living room, a little kitchen and a few bedrooms. People are thinking when they walk in there, ‘How do I make this a more modern house? How do I take out a couple of these walls and update the floor plan?’ So these 203k’s are the perfect way for customers to go into a home – maybe getting it at a better price because it’s not updated – and have the funds to update these houses.
“The realtors are really taking hold of this in most parts of the country, because now they’re creating another segment of buyers, and in turn the loan officers at these broker and banker companies are going out there and pitching it,” he added. “It’s kind of creating some more buzz as opposed to just, ‘Okay, we’ve got 20 houses to look at, and they’re all kind of the same. Just old inventory.’”
With an ever-stricter regulatory environment and the economy improving at a sluggish pace, the mortgage business isn’t getting any easier. One kind of product, however, seems to be gaining steam: the home improvement loan.