Top markets for affordable renovated housing inventory

Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at auction.

HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Mortgage Tech Virtual Demo Day

Tune in to our live Virtual Demo Day on December 1st at 10am CT to experience demos from the most innovative tech companies in the Servicing, Audit and Post-Close space.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Mortgage

DBRS: Non-QM loans to see comeback in 2018

Lenders to create new products as refis fall

As interest rates rise, mortgage refinances continue to fall, marking the possible beginning to a comeback in non-qualified mortgage loans, according to the U.S. Residential Mortgage Review and 2018 Outlook from DBRS, a credit rating agency.

But the decrease in mortgage refis isn’t the only reason DBRS is predicting an increase in non-QM loans. The company explained increasing home prices and the shortage of housing inventory will also result in more lenders expanding their loan offerings to include products outside the QM space.

“DBRS has observed the loosening of certain underwriting guidelines for some non-conforming prime programs in 2017,” said Kathleen Tillwitz, DBRS managing director of operational risk. “The areas with the most changes have generally been as follows: minimum FICO score requirements were reduced to 640 from 700, maximum loan-to-value ratios rose to 95% from 85%, maximum debt-to-income increased to 50% from 45% and compensating factors and the amount of required reserves were lowered to a range of six to 18 months from six to 24 months.”

“DBRS has also noticed more tolerance from lenders toward borrowers with previous credit events such as a prior mortgage delinquency and shortened time periods for the discharge of a bankruptcy, deeds in lieu and short sales,” Tillwitz said. “DBRS believes that throughout 2018, the U.S. market will continue to see more lenders widening the credit box.”

The report showed reduced compliance concerns, standardized representations and warranties and more confidence surrounding their loan underwriting processes are some of the reasons lenders are less concerned about originating non-QM loans.

While most non-QM lenders are targeting borrowers with high FICO scores, typically 700 and above, low loan-to-value ratios, generally below 80%, and a certain amount of liquid reserves, the report showed there were some non-prime programs being introduced in 2017 where FICO scores as low as 500 were acceptable when coupled with certain other criteria, such as there being no prior bankruptcy or foreclosure in the last four to seven years.

Last year, the GSEs announced they were increasing their debt-to-income ratio to 50% in an attempt to open the credit box further. However, mortgage insurance companies are fighting back against the lower standards.

Most Popular Articles

FHFA: Government to back mortgages up to $970,800 in 2022

The FHFA today announced the baseline conforming loan limit for 2022 will be $647,200, an increase of 18%. In high-cost areas, the new ceiling loan limit will be $970,800.

Nov 30, 2021 By

Latest Articles

Nonbanks quick to implement 2022 conforming loan limits

One day after the FHFA announcement, Homepoint, Guaranteed Rate and UWM announced that they have already implemented the 2022 conforming loan limits

Dec 02, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please