Mortgage loan quality improved in 2013
Lenders remain focused on tight underwriting
The quality of mortgage loans continued to improve in the first half of 2013, a new report from compliance technology firm Quality Mortgage Services claims.
The Brentwood, Tenn.-based firm used data pulled from its Mortgage Analysis Review Software post-closing audits to determine improvement levels in terms of loan quality overall and risk.
The report revealed that home loan eligibility jumped to 96.44% in the first half of the year from 93.66% in 2012.
Furthermore, there was a significant decline in repurchase potential from 6.08% in 2012 to 3.40% for this year, while mortgages with the potential for loan misrepresentation fell from 0.26% in 2012 to 0.15% in 2013.
Meanwhile, the company reported improvements in loan access with average credit scores for loan eligibility dropping from 748 in 2012 to 739 for 2013.
The results of this data reflect a favorable shift toward borrowers. However, Tommy Duncan, CEO of Quality Mortgage Services, noted “there may be a shift in risk and eligibility validations as the market moves into a dominant purchase and first-time homebuyer market. Although this data helps us predict shifts in the industry, Quality Control Programs should continue to validate income, employment, and complex tax returns."
The report is further confirmation that folks are hyper-focused on loan quality, Pete Mills, senior vice president of residential policy and member services with the Mortgage Bankers Association, said. Everyone is focused on manufacturing quality, documentation and investor standards in order to mitigate repurchase risk.