Tuesday, November 02, 2010 11:28 AM
An Overview of the Changes in the Mortgage Lending Market
In the current economic scenario when mortgage rates are going down and the application for mortgage loans is going up, many of the mortgage lenders are following certain rules. The rules are for all whether you’re going for reverse mortgage, you’re a senior, or if your property is going through a foreclosure process. Credit unions are upcoming mortgage lenders which is a way to increase revenue.
Credit Unions – The rising mortgage lenders
Credit unions are in the lookout to get more power to increase their mortgage loans lending capacity. They’re ready to become a mortgage lender in order to increase their revenue to cover for the costs and other expenses. This is really a good time to act as a mortgage lender as the mortgage rates are reduced and the application for the loans are on the upside. Credit unions after getting the full power to act as lending companies can help in generating revenue for the mortgage financing.
FIT – A questionnaire for reverse mortgage lenders
Apart from credit unions who’re aspiring to become mortgage lenders, the already lenders who lend reverse mortgage has to abide by certain rules pinpointed by the US Department of Housing and Urban Development (HUD). The reverse mortgage lenders are made to appear for FIT (Financial Interview Tool) before they can loan out mortgage to the borrowers. The FIT questions are directed more toward the usage of funds or other safety measures in the old age. These questions also deal with widowhood, divorce, etc. The FIT questions ensure to protect seniors and also to see if they can stay at home take help of reverse mortgage. The FIT for the mortgage lenders is to let seniors make better decisions regarding mortgage borrowing. If the seniors make better decisions when borrowing mortgage, it can avert losses.
Reverse mortgage can help seniors increase the equity of their homes. Under the Federal Housing Administration (FHA), they’re not supposed to get mortgage insurance if they are taking out reverse mortgage. As per the lending market, seniors are required to have a credit score of 700 if they’re applying for reverse mortgage. This is a sort of assurance for the mortgage lenders who don’t have any mortgage insurance that the property will be well looked after even when the value goes down.
Maximum foreclosure – Reason why lenders lowered interest rates
Due to the high rise of foreclosure procedure due to lost paperwork and subprime mortgage rates, current lending market has lowered the rate of interest to promote mortgage payments on time. Even trial mortgage modification undergone by many borrowers has made these people to foreclose their property. This has made the economy go down and so the Home Affordable Modification Program (HAMP) has reduced the mortgage rates to 31% of a homeowner’s monthly income.
The borrowers are required to submit all their documents which are needed at the application of the mortgage so that there are less cases of default. The current lending market has come up with these rules to increase revenue as well as to habituate in the borrowers a reason to pay back the mortgage on time.
Guest post by Samantha Taylor, the Community Mentor of MortgageFit and has been contributing her suggestions to the Community since 2005. Not just that, she has also made notable contributions through the various articles written on different subjects related to the mortgage industry. Few of her popular articles would include names like 'Mortgage that you can afford', 'Mobile Home Loan with Bad Credit', and 'How much mortgage can I borrow?'