As prices rise, mortgage lenders are making it easier to buy a house

Changes in the mortgage industry are afoot, with the goal of loosening some of the strict standards established after the subprime crisis — rules some blame for impeding sales.

LOS ANGELES — Home prices are rising across the country and mortgage rates, though still historically low, are up since the presidential election.

Simply put, buying a home isn’t easy, especially in high-cost metropolitan areas.

But changes in the mortgage industry are afoot, with the goal of loosening some of the strict standards established after the subprime crisis — rules some blame for impeding sales.

“The reality has sunk in that there are buyers out there who will be able to buy homes and make the mortgage payments,” said William E. Brown, the president of the National Association of Realtors. The industry is “trying to give them more options to buy a house.”

Government-controlled mortgage giants Fannie Mae and Freddie Mac are paving the way by rolling out new programs to encourage homeownership.

The companies, with their congressional mandate to promote homeownership, don’t originate loans, but purchase mortgages from lenders to keep the market moving. And any changes they make in the underwriting standards for the loans they buy can have a big effect.

Also, lenders are moving to relax some standards partly because they fear losing business as home prices and mortgage rates rise, said Guy Cecala, publisher of Inside Mortgage Finance.

“If your business is going to drop 20 percent,” he said, “you need to come up with ways to offset that.”

The changes bring lending nowhere near the easy-money bonanza of last decade, which ended in financial crisis. But they have brought criticism from some corners that liberalizing rules for down payments and how much debt a borrower can have is a slippery slope that could eventually lead to another bubble.

“This is what happened last time,” said Edward Pinto, a fellow at the American Enterprise Institute, a conservative think tank.

More options

During the bubble, borrowers could often put down nothing at all by financing the entire purchase.

After the crash, standards tightened considerably and federal regulators even floated a proposal to require 20 percent down for many mortgages.

For a low-down-payment option, borrowers usually had to turn to the Federal Housing Administration, which allows 3.5 percent down, but requires costly mortgage insurance for the life of the…

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