RICHMOND, Va., Nov. 30, 2016 /PRNewswire/ -- Genworth Mortgage Insurance1, an operating segment of Genworth Financial, Inc. (NYSE: GNW), today released results from a survey of industry executives conducted at the 2016 Mortgage Bankers Association ("MBA") Annual Convention and Expo in Boston, MA. Key findings showed that 50 percent of industry executives believe underwriting standards are overly restrictive, compared with 61 percent of respondents at the 2014 MBA Annual Convention and Expo in Las Vegas. The findings, detailed below, also measure sentiment on affordability challenges, regulatory requirements, industry headwinds and technology.
"This year's survey data is consistent with the industry's emphasis on improving credit access for more home-ready homebuyers," said Rohit Gupta, President and Chief Executive Officer, Genworth Mortgage Insurance. "While there is certainly more to be done on this front, we are pleased by the gradual progress we have seen over the past two years."
Underwriting: Industry begins acknowledging easing of credit standards
Fifty percent of respondents believe overly tight underwriting standards are hurting homeownership opportunities for U.S. homebuyers, while 12 percent feel that tighter underwriting restrictions are still needed. The remaining 38 percent believe the current standards are appropriate.
When presented with the same question in Genworth Mortgage Insurance's survey during the MBA's Annual Convention and Expo in 2014, 61 percent believed overly strict underwriting was harming the dream of homeownership, while 25 percent supported tighter underwriting restrictions and 14 percent viewed the standards at the time as appropriate. The 24 percentage point increase in executives who believe the current standards are appropriate reflects a higher comfort level with today's credit environment.
Affordability: High down-payment requirements, stringent credit requirements, viewed as pricing out the first-time homebuyer
Despite improving credit access, many potential homebuyers are still being priced out of the purchase market and the industry is divided on the root cause. Thirty-seven percent of respondents cited high down-payment requirements as the biggest driver. Thirty-three percent cited stringent credit requirements, and an additional 30 percent believe a shortage of single family homes for sale was the greatest obstacle.
Regulatory: Respondents believe that GSE Borrower Requirements on 97% LTV Loans could be eased
Seventy-one percent of respondents view the impact of borrower requirements placed by the GSEs, or government-sponsored enterprises, on 97% LTV loans either negatively because they restrict mortgage credit (which in turn shrinks the purchase market) or neutrally because they haven't had a major impact on originations. The remaining 29 percent view the impact as positive because they help mitigate risk for originations. These results suggest that respondents still think that more can be done to prudently expand the credit box.
Industry Headwinds: Increased compliance burdens and access to credit viewed as the biggest threats to the housing industry
Forty-five percent of respondents identified increased compliance burdens as the biggest threat to the housing industry over the next 12 months. An additional 32 percent cited borrower access to credit as the biggest threat, 20 percent believe the biggest threat is the current rising rate environment, and three percent cited lack of progress on GSE reform as the most severe industry threat.
Notably, Genworth asked this same question at the 2015 MBA Annual Convention and Expo in San Diego, with almost identical results (about one percent variation on all four responses). This shows that, one year after the October 2015 implementation of the TILA-RESPA Integrated Disclosure (TRID) regulation and approximately one year ahead of the new Home Mortgage Disclosure Act (HMDA) amendments to Regulation C set to take effect in January 2018, we are still in a period of regulatory evolution that is top of mind for our industry.
Technology: Overwhelming support for automation in mortgage origination
Ninety-one percent of respondents believe increased automation in the mortgage origination process will have a positive impact that facilitates and accelerates originations while improving accuracy on application forms. An additional eight percent have not seen a major resulting change in either direction, and one percent viewed automation as a negative that will hurt originations and overlook red flags in borrower profiles. As industry demand increases for faster turn times and more streamlined originations, so too will the demand for firms with top technological infrastructure.
"As an industry," Gupta continued, "we have implemented significant improvements in our technological infrastructure and we are poised to see positive steps on housing policy. It is important that our industry maintain a strong ongoing dialogue that maximizes these improvements and supports the strengthening purchase market."
Methodology: The survey of 226 mortgage professionals was administered in person at the Mortgage Bankers Annual Convention and Expo in Boston, MA, from October 24-25, 2016.
About Genworth Financial, Inc.
Genworth Financial, Inc. is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
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1 All mortgage guaranty insurance is underwritten by Genworth Mortgage Insurance Corporation.
SOURCE Genworth Mortgage Insurance