Ditech Mortgage Corp will now originate loans with a maximum loan-to-value ratio of 97%, after the company announced its readiness to participate in the 97% LTV loan program of Fannie Mae.
By offering the high LTV loans, ditech becomes the latest lender to jump on board with the 97% LTV programs announced by Fannie and Freddie Mac earlier this month. Other lenders, including 360 Mortgage Group, have already begun offering 97% LTV loans.
Both government-sponsored enterprises officially announced their individual 97% LTV products on Dec. 8.
Federal Housing Finance Agency Director Mel Watt announced the programs were in October. Watt stated that opening the credit box to serve more potential borrowers was one of the FHFA’s main priorities.
“This is an important event for first-time homebuyers – typically younger buyers who have not had enough time to save a large lump sum – and other borrowers with limited down payment savings,” said Marianne Mainardi, chief operating officer at ditech. “We want to be as nimble and responsive as possible in our ability to help meet their home loan needs.”
Under Fannie’s 97% LTV program, the loans will meet Fannie Mae’s usual eligibility requirements, including underwriting, income documentation and risk management standards. These loans will also require private mortgage insurance or other risk sharing.
Risk sharing is already required on purchase loans acquired by the company with greater than 80% LTV.
The high LTV loans are part of ditech’s efforts to re-establish its place in the mortgage market. When the company announced its plans to come back into the market, it revealed its new business plan, which entailed a three-pronged approach.
ditech said that it was planning to build business segments in direct consumer lending, retail lending and correspondent lending with its "600-plus institutional partners," according to company spokesman Richard Smith.
Smith also told HousingWire that the company is ready to expand quickly. “We are actively pursuing top performing loan officers and branches to join our retail network, and we are looking for branches that are doing at least $10 million a month in originations,” Smith told HousingWire last week.
“In order to provide the kind of full-spectrum service we want to provide to our customers, we are quickly adding top-producing branches and supporting them with our brand, marketing and state-of-the art technology platforms to make them even more successful.”
In a release, ditech said that the company already began originating 97% LTV loans via its consumer channel on Dec. 15 and will begin originating 97% LTV loans through its correspondent channel on Dec. 22.
“Helping our customers navigate the home buying process is the hallmark of our customer service focus,” Mainardi said. “Key to this has been expanding our product offerings – such as the recent launch of our VA loan program and new features to our jumbo product. Now, with the addition of 97 percent LTV loans, we look forward to serving an even broader demographic of potential homebuyers.”