Mortgage Info for Homes and Small Business Financing

Mortgage Brokers are Least Expensive Method of Loan Origination

Former FHA Commissioner, David Stevens says mortgage brokers are the cheapest channel for getting loans to closing.

“At the end of the day, mortgage brokers are not, by any stretch, the culprits of the mortgage industry’s issues.  Mortgage brokers play a very important role because they will reach into areas and serve communities where large institutions do not have the resources to do so.  Having access to mortgage financing is a critical aspect of home ownership and mortgage brokers have clearly filled that need for decades.”

Stevens goes on to describe notable FHA metrics, “In 2009, more than 50 percent of first-time buyers used FHA; nearly 80 percent of our purchase loans are to first-time home buyers.”

“The FICO scores have risen: 693 now v 633 two years ago.”

“Our most difficult loans were made in book years 2006 through 2008.  Looking ahead, as private liquidity re-enters the market, and FHA steps back, we will have higher quality, less risky mortgages, which will be appropriately underwritten.”

“First, there will be new loan-to-value and credit score requirements.  Loans to borrowers with a credit score of less than 580 will require a minimum 10 percent downpayment.  Loans to borrowers with a credit score of 580 or above will require the traditional minimum of 3.5 percent downpayment.”

“Second, the up-front mortgage insurance premium will increase to 2.25 percent.  We will also pursue legislative authority to increase the statutory cap on the annual Mortgage Insurance Premium.”

“Third, we will reduce allowable seller concessions from six percent to three percent to conform to industry standards.  This will also reduce potential value inflation.”

“Fourth, we will increase enforcement efforts to ensure compliance with FHA guidelines and standards.  We will use a scorecard system to evaluate and report lender performance.  This will compliment the current information available from the Neighborhood Watch data.”



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