After the President gave the State of the Union Address last night, I thought it was only fitting to deliver the “state of the home mortgage market” address.  There are a lot of changes looming in the home loan industry in the next few months which is making borrowers reconsider their financial moves.  Home mortgage rates are beginning to see an upward trend and many homeowners are kicking themselves for not moving forward with a refinance loan in November or December when rate had fallen to 50-year lows. 

In April there will be significant changes as the Dodd-Frank mortgage reform bill will finally go into motion.  There are many short-sided issues in this bill designed to protect consumers, but in the end most industry insiders believe that it will increase the cost for home loans and mortgage rate refinancing.  In is inevitable that we will see a consolidation in the home financing market as many smaller brokers will close their shops, because they can’t compete with the new rules. 

The mortgage reform bill will change the way brokers and loan officers are paid and many lending companies have already started down-sizing their loan originators.  In the end it is likely there will be less loan officers which mean that borrowers will get what the banks are offering.  With a competitive mortgage market, consumers benefit with more choices, diverse lending niches and competitive pricing. 

Hopefully the Federal Reserve and the U.S. government will wake up and realize that a competitive mortgage market is good for the consumer and good for the economy.  The VA mortgage loan is still a great financing vehicle, but not many borrowers qualify.  FHA home loans remain somewhat aggressive, but even HUD is requiring more equity, better credit scores and the insurance premiums continue to rise.

Home values will need to rebound and home loan guidelines need to loosen up so that the average borrower who can afford a home can qualify for a home loan.  Right now it seems like only the “best of the best” qualify for new home financing or mortgage refinancing.  We need more private money back in the marketplace, but the foreclosure crisis needs to be solved before most of the non-government mortgage lenders will jump back into the game.  Until then — Make the most with what you have and remember that the United States of America is still the best country in the world.