A healthy housing market is returning. A refinance boom due to record low interest rates is waning. Customers applying for a mortgage today compared to five years ago are seeing a "more comprehensive, educational process" than in years past.

A healthy housing market is returning. A refinance boom due to record low interest rates is waning. Customers applying for a mortgage today compared to five years ago are seeing a “more comprehensive, educational process” than in years past.

These are some observations of the chief executive officer of The PNC Financial Group’s mortgage business, Todd Chamberlain. He visited the area at the end of November to speak at a town hall meeting with employees.

In an interview with this newspaper, Chamberlain discussed lessons learned from the financial crisis and how PNC plans to grow mortgage customers as the housing market recovers from the 2008 crash that saw home values plummet nationwide.

Pittsburgh-based PNC is the third largest bank by deposits in the Cincinnati and Dayton metropolitan areas, and in Clark County, according to the Federal Deposit Insurance Corp.

In the big picture in terms of the housing market, what are the trends you’re seeing?

Answer: “The housing market continues to improve. You’ve see home prices solidify and increase in many areas.”

“With the advent of unemployment improving, you’re also seeing delinquency rates decline for homeowners, which is a great trend.”

“What you’re also seeing with rates having risen a little bit earlier this year and staying more elevated than their historical lows is a decline in refinance activity. There’s clearly a noticeable decline in refinances being somewhat offset by an increase in purchase transactions as the housing market gets healthier.”

In the mortgage business, what statistic out there, what trend gets you the most excited?

A: “The trend on home purchase transactions picking up is the sign of a very healthy housing market returning.”

“It’s going to take time to get back to sort of quote, unquote normal levels. But you’re clearly seeing that improvement.”

“That along with the fact that homeowners are getting financially healthier, are able to sustain homeownership, so foreclosure rates and delinquency rates, from the fact that they’re falling is obviously a very good thing both for the economy and for individuals.”

What are the challenges for the housing market?

A: “There’s a supply challenge. There’s, believe it or not, a housing supply deficiency that will take some time to work itself out.”

“It’s not linear. Different markets have different respective issues.”

“Home prices are not all the way back to pre-crisis levels, so there’s room for improvement there. And unemployment isn’t all the way back either.”

“All of those things need to continue down the path that they’re headed.”

How are these changes and trends impacting PNC and its mortgage business?

A: “PNC has a strong focus in helping people acquire and sustain homeownership. As the purchase market firms up, we’re very well positioned and have a focused strategy around assisting people (to) obtain homeownership. In addition, we’ve been assisting customers’ refinance activity, but as we migrate forward in this environment, we expect that will decline over time.”

How do you think the housing crash, and now the recovery, what we’ve learned over the last five years, how do you think that’s changed the mortgage business?

A: “We view mortgage as a critical aspect of our full service financial strategy. We view that being in the mortgage business is critical because for customers, it’s really the biggest financial transaction that a retail customer will go through potentially in their lifetime.”

“As a result of that, we have to be able to provide that service and we have to do it well. It has to create opportunities for individuals to appropriately understand what they’re getting into and what they can afford to put them in a situation where it is again sustainable for them to acquire a home.”

“The lessons learned include making sure that we’re good at all of those educational and advisory functions as a part of the mortgage lending process so that we don’t end up in situations where we position people not in a good place for their particular situations.”

What is PNC doing differently and are there any examples of programs like that, that you’re doing?

A: “We’re spending an awful lot of time, energy and money on training our loan originators and all of our mortgage employees to be very well educated on the products and services that we offer.”

“As an example, last year alone in mortgage, we had 285,000 hours of training that we deployed to our employees.”

“In addition to that, there has been the opportunity to improve the communication in written form to consumers. So through regulations, there’s additional required disclosures and the like, but we also provide additional information beyond that through our web presence, through other media that educates customers.”

“In addition to that, our credit policies have been aligned with ensuring that people have the ability to repay the loans that they’re taking on.”

“It’s a combination of things, but clearly it is a more comprehensive, educational process than it was in years past.”

For the average person, how is applying for a mortgage with PNC now different than it was in 2006 or 2007?

A: “Clearly the application process, the process of obtaining a mortgage loan in today’s world is much more intensive and requires additional documentation than in years past.”

“Consumers who have not financed a home, maybe ever, but certainly those that did so in the 2005, 2006 arena and now are going through it are going to feel that it’s a much more intrusive process.”

“But having said that, again the intentions are very good and the information that is being gleaned from those discussions puts the consumer and frankly the lender in a better position.”

How do you balance not going back to the same lending policies that got the economy in trouble in the first place with opening credit to help the economy grow?

A: “We’re interested in lending to as many customers as have a need for home financing and are in a position to acquire the loan and be able to sustain homeownership and make the payments comfortably.”

“As we look at this market environment, we are as you said balancing the need to make sure that we protect the bank from credit risk and future risk that we’ve all just paid a price for and make sure that we balance the responsibility to the consumer to make sure that they’re fully educated and are in the best position possible to make a very sound decision on taking on a mortgage obligation.”

“But we very much would like to grow our mortgage business and we have been growing our mortgage business and market share.”

“We will not go beyond the point at which we create undue risk for the consumer or for the bank.”

What does it take to qualify for a loan now?

A: “There’s clearly regulation that is attempting to get at qualified mortgages and the ability to repay. There are definitions that are bubbling up through regulation to attempt to define what is an appropriate debt load for people.”

“As a result of our lending experience and regulation, we take a posture that we want to lend to customers who can afford the homes that they are acquiring or refinancing and they’re in a position to sustain that homeownership.”

Do you think nowadays typically a higher downpayment is required?

A: “Interest rates are still at historical lows. They’re off the bottom of where they were back in May, but they’re still at very low levels.”

“Home prices are still very favorable for people to acquire homes. That’s wonderful news and is encouraging. Having said that, clearly there has been a tightening of credit requirements across the spectrum and on average those requirements are tighter than they were back pre-crisis and I think appropriately so because we as an industry I believe and certainly here at PNC want to make that sure we’re assisting customers who can get into homes they can afford for the long-run.”

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©2013 the Dayton Daily News (Dayton, Ohio)

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