A Conversation With ... Dennis Vance

What is your role at Old Missouri Bank, which you joined three months ago?
My main job is secondary-market loans – fixed-rate loans for purchases and refinances. The main reason I came here was that when I worked at Mid-America Mortgage, I was able to make (everything) from car loans to commercial loans – a lot of people don’t realize that – and at Old Missouri Bank, they offer the same types of products that I offered before.

I’m able to take care of my customers, whether it’s a car loan or a residential home loan. I’m able to do the in-house products as well as the secondary market [home] loans.

Interest rates have reached historic lows, and were at 3.625 percent for a 30-year fixed mortgage as of June 4. What does that mean to the home-buying market?
These historic low interest rates allow some people to get into the market who previously were not able to. The other thing it helps people do is buy a higher-priced home than they could afford previously. Maybe they can qualify for a $120,000 house, where before, maybe they qualified for less than $100,000. But it is different this time around.

I remember back in 2003, I was working until 10 o’clock or midnight most nights. That was the busiest year we ever had. Even though rates are even lower now than they were back then, people aren’t knocking down your door to refinance or purchase this time.

Purchases have picked up, which is very good for the Springfield economy. But the problem we’re running into is that I have a lot of customers right now who do want to refinance with these historic low rates, and they’re not able to because their houses are not appraising for what they were before.

What’s causing appraised home values to drop?
Right now, there’s not really anything wrong with the houses. It’s more of a problem of people who have been desperate and either through foreclosures or short sales, (sold homes that) are affecting the market. Years ago, when an appraiser went to do an appraisal, and there was a foreclosure or something, they would say, ‘Oh, that was an aberration,’ so they would ignore that sale. A couple of years ago, regulators came along and said that now that there are so many of those, this is the new reality – the new market. Appraisers have to take them into account.

A lot of times, when the appraisals are coming in low, it’s not the appraiser’s fault. It’s that these are the comparable sales, the sales based on foreclosed properties and short sales.

How will this issue correct itself?
This is really a nationwide issue, but it’s getting through the glut of these foreclosed and short-sale properties. Right now, I believe prices are starting to firm up, and as the economy picks up, I think that will help.

In fact, in one of the purchases I had recently, the young lady got into a bidding war a little bit, and she actually had to pay a little more than the asking price on a home. It’s been a lot of years since we’ve seen those types of things, so I think that’s a good sign that prices are stabilizing, and they have to stabilize before they can start increasing.

What other signs of improvement are you seeing?
Two weeks ago, I had six applications in one week, and all six of them were for purchases. For the Springfield economy, I’m very happy to see that the purchase activity is increasing. It looks like to me that the economy, at least here in Springfield, is improving. Five of the six were approved.

Construction activity seems to be picking up, too. I seem to have more borrowers who are coming in and having homes built for themselves.