Why Haven’t Loan Officers Been Told These Facts? FHLMC Provides Lenders with Marketing Know-how for Generation Z Buyers
From the Free Marketing Ebook from FreddieMac:
Who is Generation Z?
- Are between the ages 10-24
- Are the most diverse generation
- Estimate being able to buy first home by age 30
- Upbeat about homeownership and future finances
As they look to prepare to buy a home, which milestones are important to Gen Z?
- Having a job
- Having good credit
- Saving for a down payment
- Finishing their education
- Paying off student loan debt
Gen Z challenges and barriers, 37% of Gen Z are unsure how much is required for a down payment.
More than 60 percent of young people in their late teens and early 20s either don’t know or overestimate how much they’d have to put down on a home. This misperception could unnecessarily delay an otherwise financially optimistic generation from buying their first home. It’s not surprising the oldest members of Gen Z don’t know specifics on down payments, considering the “20 percent down” myth still holds sway over most people, particularly if they are renters.
A quarter of Gen Z adults between the ages of 18 and 23 said in a recent Freddie Mac survey they’d have to be able to put down at least 20 percent to even consider buying a home. Another 37 percent couldn’t quote a percentage range.
The actual median down payment for first-time homebuyers in 2019 was seven percent, according to the National Association of Realtors (NAR).
Compounding the problem of down payment misperceptions is that nearly 90 percent of Gen Z want to have fully saved for a down payment before attempting to buy a home and said it was the third biggest impediment to homeownership, after high home prices and job instability.
Get the FHLMC Gen Z Aid at the link below.
eBook: Gen Z – An Optimistic Borrower of the Future
BEHIND THE SCENES – HUD Policy Updates, Out with the New, In with the Old: Appraisal Reconsideration of Value Policy Reversed
From HUD
On January 20, 2025, the President issued Executive Orders aimed at reversing policies that have adversely affected key sectors, including the housing market. As part of this ongoing effort, FHA is focused on eliminating policies that have created barriers, increased regulatory and financial burdens, and deepened disparities in lending practices. Rescinding the policy announced in these MLs is a step in aligning with the Administration’s broader goal to reduce unnecessary regulatory burden and foster long-term economic stability for all Americans.
On November 17, 2021, FHA published ML 2021-27, Appraisal Fair Housing Compliance and Updated General Appraiser Requirements, to clarify existing FHA requirements for Appraisers and Mortgagees regarding compliance with fair housing laws related to the appraisal of Properties. Prior to the publication of this ML, there were concerns that the Uniform Standards of Professional Appraisal Practice (USPAP) Ethics Rule was insufficient to clearly address the issue. Since the publication of ML 2021-27, the Appraisal Standards Board (ASB) of the Appraisal Foundation amended the USPAP Ethics Rule in the 2024 edition of USPAP and resolved the concerns the ML intended to address.
On May 1, 2024, FHA published ML 2024-07, Appraisal Review and Reconsideration of Value Updates, aimed at expanding HUD’s existing Reconsideration of Value (ROV) process to include a Borrower-initiated ROV process and establish minimum requirements and protocols for the Mortgagee to follow when processing a Borrower-initiated ROV request. While industry feedback encouraged a consistent industry-wide standard for processing ROVs, there were greater concerns around the cost burden associated with implementing and operationalizing some aspects of the updated policy.
In October 2024, FHA began collecting data to track Borrower-initiated ROV requests and their outcomes. Given the short time frame since data collection started, there is insufficient data to conduct meaningful analysis or to draw conclusions on the impact of the policy.
On January 20, 2025, the President issued Executive Orders aimed at reversing policies that have adversely affected key sectors, including the housing market. As part of this ongoing effort, FHA is focused on eliminating policies that have created barriers, increased regulatory and financial burdens, and deepened disparities in lending practices.
Rescinding the policy announced in these MLs is a step in aligning with the Administration’s broader goal to reduce unnecessary regulatory burden and foster long-term economic stability for all Americans.
Tip of the Week – Communication Management Plan
Effective communication is crucial for home buyers during the purchasing process. It involves keeping all parties informed, addressing concerns, and ensuring a smooth transaction. Consequently, successful transactions hinge on good communication. Communication is so central to stakeholder satisfaction that communication management must be a primary focus for the mortgage loan originator (MLO).
A simple checklist is suitable for most transactions. Customize your communications for key stakeholders based on their needs. Consider the frequency, content, medium, and mode of communication.
A medium is the channel or system used to convey a message, such as print, email, or telephone. A mode refers to the means of communication, including visual, linguistic, or aural. Many stakeholders have strong preferences for data visualization. This includes things like bar charts and stoplight reports. A stoplight report is an example of common high-level reporting. Green means everything is going according to plan. Yellow means there are threats to the plan. Red means the plan is in jeopardy. When the buyer’s checklist of necessary documents is labeled red or yellow, it helps get the message across to stakeholders that Mr. Buyer needs to get his act together.
Communication Methods
Lastly, mortgage loan originators (MLOs) should consider the various communication methods at their disposal. There are three primary methods to keep in mind. Understanding when to use each method is crucial for ensuring effective and efficient communication. It requires a careful balance that leverages available resources wisely. Most importantly, MLOs need to assess how much time they can dedicate to communication.
**Interactive communication** Generally, interactive communications are the apex of effectiveness. This includes face-to-face conversation, videoconferencing, and the telephone. Some might consider texting interactive. However, texting is notoriously ineffective in place of more interactive communication. Interactive communication used unwisely is not the apex of efficiency.
**Push Communications** These are typically useful when recipients actively view the information you send them. Examples include reports, emails, voice messages, and video messages.
**Pull Communications** This method is often the most efficient form of communication. It involves recipients accessing a central location to retrieve the information they need, such as customer-facing dashboards like a “loan status” dashboard. Examples include SharePoint websites and databases.
Communications Management for Home Buyers
Key Aspects Include:
- **Clear Information Sharing:** Make sure all details about the property, financing, and closing processes are communicated clearly and promptly.
- **Regular Updates:** Provide consistent updates to buyers about the status of their purchase. This helps alleviate anxiety and keeps everyone on the same page.
- **Addressing Questions and Concerns:** Create an open line of communication where buyers feel comfortable asking questions and raising concerns.
- **Engagement Tools:** Utilize tools such as email, phone calls, or messaging apps to facilitate easy and immediate communication.
- **Feedback Mechanism:** Implement a system to collect feedback from buyers to improve future communications and the overall buying experience.
By focusing on effective communication management, MLOs can assist home buyers in navigating the process with greater confidence and success.