At the recent "Data, Demand, and Demographics: A Symposium on Housing Finance" presented by the Urban Institute and CoreLogic, where several of the invited speakers touched on the prevalence and effectiveness (or lack thereof) of current regulations.
Some of the chatter among the other attendees of the summit focused on regulations as well, especially after the presentation given by Debra Still, the president and CEO of Pulte Mortgage.
Still spoke during an early afternoon panel, which focused on the post-crisis evolution of the mortgage market, and surprised some in the crowd by presenting concrete evidence of how much more complicate mortgage lending is now than it was 10 years ago.
Most notable among those changes is how much more it costs Pulte Mortgage to originate a mortgage now than it did in 2006.
According to Still’s presentation, it cost Pulte Mortgage $3,100 to originate a mortgage in 2006. By 2012, Pulte’s cost rose to $5,700 per loan, and this year it’s even higher.
Still said that in 2016, it cost Pulte $6,100 to originate a loan, just shy of twice as much as it did 10 years ago.
Pulte’s legal and compliance costs have also risen sharply since 2006.
Ten years ago, Pulte’s legal and compliance outlay checked in at $2 million. That figure increased to $3.5 million in 2012, and this year, Pulte expects its legal and compliance expenses to hit $4 million – double the cost of 2006.
In 2006, Pulte’s closings per employee was 39, while this year it’s 19, a decrease of 51%.
For underwriting employees, the drop is even more significant.
According to Still, Pulte’s closings per underwriting employee was 1,299 in 2006, compared to 253 in 2016, a drop of 81%.
Still said that in 2006, the average loan file checked in at 302 pages. Now, the average loan file is 806 pages, an increase of 167%.
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