John Mafrici - Julia Moore

What can house hunters expect on the mortgage market?

Q: What, if any, advantages do borrowers have now over what they might have found a year ago?

A: We're actually seeing more disadvantages to borrowers. At the federal level, the flexibility we have to help consumers pay closing costs and make it affordable to them is being challenged by a Barney Frank-Chris Dodd bill.

Then there's a bill in the Oregon Legislature, (Senate Bill) 663, which basically prohibits a mortgage originator from selling a mortgage into the secondary market for five years. That's what allows lenders to re-lend the money. It will tie up a huge amount of funds that could have been re-lended to other consumers. It covers every residential loan in the state of Oregon, and we're scrambling to get clarity on it and to ask the question: Why at this time are you going to hogtie a lender's ability to re-lend money?

On the good side, we still have all the standard loan programs. You can buy a house with an FHA (Federal Housing Administration) loan with 31/2 percent down, and many people are qualifying. Rates are still great, but the biggest challenge right now is government regulation.

Q: Are you seeing more inquiries from possible buyers?

A: Now that house prices are down to half of what they were in the market a few years ago, people are realizing they could apply for (a) loan and even own a house. They are very excited to apply for the possibility of owning a house. Our job is to guide them through the myriad state and federal regulations.

Q: Are there certain kinds of properties where it's easier to obtain a mortgage?

A: Distressed properties are always a problem during this crisis. A lot of houses haven't qualified because of their state of repair. People are able to get a good deal, but they need to use a purchase/rehab loan program. Once we identify the needs of a property, some of the money goes into a special fund. Then after closing, those repairs are completed.

What ends up happening: The big banks that own the properties don't give us time to put the pieces in place. It takes more work and time to do the job the right way. A house with a lot of repair needs takes longer in escrow. I think the banks are often waiting for a buyer with all cash, and that's not necessarily the case.

Q: Are lenders more likely to qualify buyers on foreclosures?

A: Not if it's in (a) state of disrepair. If it is in good shape, it should close like a normal sale.

Q: Are there any properties with a quicker process?

A: If you have (a) 20-percent down payment, conventional lending is the quickest way to go.

A lot of people don't, so they go with a standard FHA 31/2. Even so, there are new costs coming. FHA is raising the mortgage-insurance premium on April 18, another quarter percent of the loan. On a $200,000 loan, that's an extra $41 a month.

Q: Is refinancing advantageous right now?

A: Even at 100 percent loan-to-value (ratio), there are good programs that can help people save on their payment. The main advantage right now would be to save on the monthly payment. Some people are really motivated to have their mortgage paid off before they retire.

Q: Will that induce more refis in our area?

A: It depends on the interest rates. There is always the concern they might increase in the near future. They are interested in refinancing if it saves them, on average, $100 or more on their payment. Right now, they know that savings might be going into the gas tank.

Q: What is the state of the local mortgage industry?

A: At the height of the market, there were more than 8,000 mortgage originators that were licensed to lend in the state of Oregon. Now, our best estimate is that there are fewer than 3,000. That tells us a lot of people were forced out of the market due to the lack of real-estate activity, and those in the market were able to pass stringent relicensing requirements in 2010. It was a bigger part of the change than the real-estate market itself.

Reach Mail Tribune business editor Greg Stiles at 541-776-4463 or e-mail business@mailtribune.com. Read his blog at www.mailtribune.com/economicedge.

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