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In case you missed it (ICYMI), here is a link to an article recently published in MortgageOrb, an industry publication about lenders relaxing quality standards (shameless plug for you know who).
Seriously, though, with rates rising and refi’s declining it is becoming more challenging for mortgage lenders to find new business.
Due to decreasing homeownership rates, there are now calls for lenders to reduce their current credit standards and find ways to lend to more low to moderate income and first-time homebuyers.
Can we get some relief for lenders from the current restrictive lending requirements, under Dodd-Frank, and the threat of actions from DOJ and HUD?
No, let’s just put it all on the lenders to find ways to solve the country’s housing crises. Let’s go back to putting people into homes they can’t afford. Then the lenders will once again get blamed for predatory lending.
The reality is that lenders must compete at the current rate and housing environment. Lenders want to provide financing to as many qualified consumers as possible.
Let’s face it when lenders lend, there’s risk. A risk that good lenders are willing to take…to a point!
To minimize the risk and maximize the results, lenders must manufacture a quality product. There is no substitute or shortcut. To do so they need a complete, compliant loan quality review program.
Whether this is done in-house or outsourced, this program must ensure that every loan originated complies with all legal, agency, mortgage insurer and secondary market requirements.
If lenders do get some regulatory relief down the line, it’ll be a bonus. Regardless, loans should be originated to consumers that have the ability to repay the debt while maintaining the home.
That way, we will lend to more qualified buyers, grow the homeownership rate, and avoid many of the problems of the past.
Quality is still job 1. That shouldn’t change.
