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Residential Department: Q&A: Keith Gumbinger, December 2012


Q&A: Keith Gumbinger,

Keith Gumbinger, vice president,

As 2012 comes to a close, it’s time to look back at how the mortgage industry has changed this past year — and how it may continue to change in 2013. vice president Keith Gumbinger spoke with us about past and present trends, as well as some of the topics and legislation that originators should keep an eye on as the industry rings in a new year.

What are some of the biggest market changes in 2012?

If I had to pick one item that really has made a measurable impact, it would have to be the implementation of HARP [Home Affordable Refinance Program] 2.0. There are up to 11 million homeowners who are underwater — though not all of them are Fannie- or Freddie-owned loans — but the portion of those borrowers who have had the opportunity to participate in this record-low interest rate environment has been crucial to both originators and the economy in helping borrowers to recast their balance sheets and free up money for additional consumer spending or to more easily manage their debt loads.

What would show that the economy is gaining momentum?

We would need to see some regular declines in the unemployment rate, and more importantly, improvements in the rate of hiring, which was below 100,000 a month for much of the summer and has barely worked its way over that line in the last couple of months. We’d need to see us moving closer to 200,000 new jobs created each month — and certainly more would be better — but a minimum of 200,000 [would really let us] know that the employment market and the economy itself are starting to grind their way forward.

How will a third round of quantitative easing (QE3) affect the mortgage industry?

QE3, in keeping interest rates lower than they would otherwise be, should provide opportunities for borrowers to refinance well into 2013. There’s certainly a fair number of people who can benefit from refinancing, people whose financials may be better aligning themselves, but at the same time, if QE3 is successful in helping to firm the economy, that should lead us into some more purchase opportunities, as well. Stronger economic growth does allow borrowers to rebuild their finances and actually have a chance to purchase homes. So, I think QE3 is going to be very important in transitioning us from a refinance-business oriented circumstance into one that supports purchase originations. It’s going to be a centerpiece for a while.

How can following economic trends improve a mortgage broker’s business?

Becoming more fluent in the economic lexicon can allow you to talk to your consumers and relate to them that you not only understand how to get their mortgages processed, but also that you can be an adviser. They’re going to call you and rely on you for your expertise as to what’s happening in the market. And there are ways that you can reach out and engage your audience with something even as simple as a tweet. [Following economic trends is] a way to broaden your lexicon, and to expand your conversation beyond just the simple taking of applications. It allows you to become more of an expert in your field.


Raymond Fleischmann was editor of Scotsman Guide's Residential Edition. For questions about this article, call (800) 297-6061 or e-mail

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