Federal Regulation for the Home Lending Market

There are new federal regulations on mortgage lenders coming out way soon. Recently, President Bush signed a bill into law at the end of July that encourages state regulatory commissions to register all residential loan originators, and creates a national database of lenders that tracks fraudulent activity from state to state. This will keep lenders that have been shit down in one state from moving across the state line and opening up shop to commit the same crime again. This is currently a fairly common practice.

At the apex of the housing boom, there were close to 400,000 people acting as mortgage brokers nationwide. That number has now dwindled to less than half, at around 145,000. In Michigan our part of that pie is about 20,000 lenders.

For example, a credit union based in Alma, MI has recently shut down a mortgage company that it owns as part of an acquisition that specialized in problematic mortgages that the parent company would normally not service. And while bank failures are relatively rare, this type on lending is coming under more and more scrutiny.

Michigan, however, has seen a smaller amount of bank and lender consolidation than the rest of the country. Part of that may be due to the fact that Michigan is leading the nation in economic downturn, financial troubles, unemployment, and foreclosures. Companies look at consolidating or acquisitions as taking on more problems from other businesses.

According to many major indicators, Michigan has been in a recession for the majority of five years, and that has had a major impact on the housing market. We are last in the nation for GDP, and that indicates that no one is doing worse than we are.

So what does this mean for the Grand Rapids housing market? More homes for sale and less people on the market looking to buy. To get the demand side of the equation up, local businesses need to be attracting employees from different parts of the state, or ideally, out of state. That puts a house in another state on the for sale side of the ledger, and takes a house for sale in Grand Rapids off the market which reduces supply and helps sellers. Another way for the supply side to tighten up is for renters to buy houses. That generally won’t happen in the numbers that we need during harsh economic times, which we just happen to be in right now.

The only thing we can do is wait it out, and congratulate yourself if you’re looking to buy a house right now and don’t have one to unload. It’s a buyer’s market!

Allen is a part time real estate investor who follows the housing market in Grand Rapids. Look for more information on Grand Rapids homes for sale here.

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