Niche Markets Are Disapearing

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               Niche Markets are the only way for mortgage companies to distinguish themselves from competitors and drive business.

This year the new ability-to-repay rule (ATR) will establish the
regulation for lenders to refuse qualified mortgages (QM) to borrowers with a
debt-to-income ratio exceeding 43 percent. As a result, mortgage brokers and
originators can no longer afford to cater to specific customers. The new
guidelines simply burden lenders with too much risk. So, companies are no
longer offering as many specialized products and are trying to separate
themselves from their competitors in a more nebulous way: by promoting their
superior customer service and responsiveness.

Larger banks can afford to take risks by funding their own
non-QM loans. Smaller banks have certain exemptions. These companies at the two
extremes should come closest to maintaining business as usual. Mortgage
professionals in the middle have to compete with more limitations and they will
generally offer the same products as their competitors. That means that these
midsized companies could lose their main tool for standing out — their niches.

                                  At this post Inet-Loan has a active list of small banks and niche market lenders that are still active in the market.                                                                                                                     

Although it is unclear how mortgage professionals will respond
to this challenge, institutions will be forced to be creative. Mortgage
professionals will carve out niches. Competition has not been totally regulated
out of the market and there is still room for mortgage companies to find a new

James Wharton is vice president of Inet-Loan Processing and President of The Bankers Group. There Web Hosted Mortgage Processing Center is transforming the way mortgage brokers and banks do business. There web based contract processing, anytime access and  24/7 true collaboration on loan files will keep them profitable. Reach James at or 530-206-6885.

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