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Underwriting Guidelines Begin To Ease By C. J. Coury

Mortgage Underwriting Guidelines Beginning To Ease

By C. J. Coury

I have been looking forward to writing about this topic for months now – the time has finally come!

Over the past 2 years or so we have been witnessing the end of a much too liberal lending era. Unfortunately, the change in direction went too far and stayed too long. To quote the top mortgage professional Penny Hill “the pendulum has swung too far in the other direction and is stuck on stupid”. I am pleased to announce that it is finally beginning to swing back to the level of safe but smart. Although there are still many guidelines that still need to relax, like stated income for self-employed borrowers with excellent assets and credit, we are finally seeing the return of some common sense decision making and re-entry into the market by mortgage security investors and MI companies.

Below are some recent changes as well as some that are coming soon:

• Allowing the use of business funds for down payment and closing costs
• Agency relaxation of condo guidelines
• Use of depletion of assets for income qualifying
• Limited review of condominium criteria and documents
• Reduction of minimum credit scores for Mortgage Insurance

The pendulum has definitely started to swing back to a more common sense and less defensive lending posture. While we still have a long way to go it is refreshing to finally see things moving in the right direction!

C. J. Coury is a Vice President with HomeBanc and oversees the Greater Sarasota market. He has been a mortgage finance professional since 1983. C. J. may be reached at (941) 730-2444 or by email at cj.coury@homebanc.com.

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