Building a solid loan portfolio is often a daunting and never-ending process. Regardless of the strategies adopted, there comes a time when a bank or credit union must add new products to its portfolio. After all, only an adequately diversified portfolio can help a financial institution reduce the overall investment risk, mitigate the negative impacts of adverse economic conditions and achieve more consistent results.
But when it comes to making a loan portfolio stronger, how can you determine which loan products would best suit your bank or credit union? To find the right answer to this question, please join us as we analyze two market trends below.
Increasing Demand for Alternative Home Financing Solutions
A preliminary report recently issued by Freddie Mac indicates that mortgage origination volumes increased 5 percent in the first half of 2016, compared to the same period in 2015. In addition, the Pending Home Sales Index was 1.4 percent above the year-to-date figures for 2015.
Fueled rather by buyers than refinancers, increasing mortgage origination volumes signal the strengthening of the mortgage market. But despite the upward trajectory of mainstream mortgage lending, we all know that there are currently too many players in this market segment. That can be a problem for a small lender who might lack the financial resources to compete successfully with larger financial institutions. Therefore, a small bank or a credit union looking for ways to consolidate its mortgage portfolio should consider alternative loan products that can provide strong value.
The manufactured home lending industry provides one of the best opportunities for investors to build and preserve long-term wealth within their loan portfolios. Our own data corroborated with other credible sources indicates a growing demand not only for manufactured homes but also for the financing options eligible borrowers can use to finance the purchase of these homes.
Nowadays, more and more people are becoming aware of the advantages of this housing alternative and the lending solutions associated over site-built construction and conventional mortgage programs. Manufactured home financing options gaining momentum is a positive sign for a financial institution that intends to add these products to its loan portfolio.
FHFA Points to a New Direction: Why Is This Important?
A few weeks ago, the FHFA has finally issued its new “Duty to Serve” rule, which specifically requires GSEs to focus on “improving the distribution and availability of (...) financing” alternatives for the manufactured housing sector in addition to two other underserved market segments.
How can the new rule help you make your loan portfolio stronger? Increased access to manufactured home financing is expected to bring an influx of homebuyers into the market. But that’s not the only good news coming from the FHFA. The Agency will continue to monitor the entire manufactured home lending sector to ensure consumer access to affordable manufactured home loan programs, including chattel and mortgage loans, which are operated in a financially safe manner. The Federal involvement can help all the financial institutions operating within this market segment establish the trust necessary to attract new customers and members.
As a leading manufactured home lender, we’ve differentiated ourselves from the competition through our deep industry knowledge, experienced financial professionals, exceptional customer service, a comprehensive suite of low-risk, high-yield manufactured home financing products, and a scalable lending platform that can grow with your business.
If you’re looking for a reliable manufactured home lending partner ready to help you enhance your loan portfolio and drive quantifiable financial performance, while streamlining in-house operations, minimizing risks and reducing costs, contact one of our service professionals today to find out more about our product and service offerings.