The recently enacted Financial Reform Act, also referred to as the Dodd-Frank Wall Street Reform and Consumer Protection Act, is making its presence known in the mortgage, real estate, and relocation industries. Recently, Michelle Rasschaert, Marketing Director for Wells Fargo Home Mortgage, addressed this new legislation with relocation and real estate professionals from Leading Real Estate Companies of the World^® and RELO Direct^®. The impact of the legislation is being felt by all stakeholders in real estate and relocation transactions. All participants in this discussion were in agreement to some of the key observations relative to market impact since going live with this legislation.  A summary of Ms. Rasschaert's presentation can be found here.

Nearly 300 provisions within the Financial Reform Act impact the mortgage industry and home purchase process. Home buyers transferred by their employers no longer receive preferential status as being “low risk” and are processed as part of the general population relative to documentation requirements. Benefits previously offered to corporate transferees such as 24 hour loan commitments; spousal income consideration at the new location; expedited closings for “rush” mortgages; and low documentation requirements are now no longer available.

The result is that transferees, like the general population, are finding it more difficult to qualify for a mortgage; and that once qualified, loans take longer to close and costs are higher due to more complex application processing. However, most mortgage applicants are more accepting of current market conditions including:

• Recognition of home value deprecation and less resistance to professional appraisals and broker opinions of value. This is resulting in more reasonable list prices and marketing strategies
• Fewer home buyers are “buying high” and taking out the maximum loan possible
• Appreciation and understanding because homes purchased in the new location will be also be priced lower; the transferee may be able to buy “more house for the money” than would have previously been available

In general, mortgage rates are competitive among mortgage providers. Therefore, with the governmental strategy of commoditizing the mortgage industry, what makes a difference for consumers is the institution’s service track record. For transferees -- where time is such a valuable commodity -- this focus on service is elevated in importance. Institutions who provide frequent touch points during the application process, professional and experienced staff; support through a more complex application process; and timely closings are better positioned for success within the corporate relocation arena.

Clearly, in the respective industries of workforce mobility, real estate, and mortgage, the difference maker is service. This may be an unintended consequence of the government’s actions to protect consumers; but the net result is that those who will thrive in this new environment are those who have built their reputations upon service excellence. As the recent testimonial below demonstrates, RELO Direct^® understands these challenges and strives to continually exceed expectations.

“I wanted to say thank you for the help during my relocation the last few months. I don't mean that to sound as a generic thank you either, you really were great. This was a very rough move for us, our 3rd in about 4.5 years and it should be the last. It was our first move selling a house and buying a house in the same move and it was stressful. I think at one point I had about 120 sheets of documents to go through and submit for the properties. You always helped when I needed it, and you were always there and patient when I had questions. For that, I say thank you. You helped make my move easy whenever you could. I don't want to go through a corporate relo again anytime soon, but if I did, I would hope I would be lucky enough to work with you again.”

These are challenging times, but great companies realize that service excellence makes the difference for consumers, transferees, and corporations.

Posted by:  Roger Atchinson