Another challenge for originators

by Justin da Rosa11 Jan 2016
TRID isn’t the only thing testing loan officer resolve this year, now that lenders appear to be tightening their standards – but will the trend continue?

Mortgage credit availability decreased in December, according to the Mortgage Bankers Assocation’s Mortgage Credit Availability Index, which indicates lenders are becoming stingier when it comes to who they will lend to.

However, the MBA said the reason for the decline was due to changes in loan programs among various lenders. Those programs have been replaced, and it remains to be seen whether credit availability will be affected by the new programs in the long-term.

"Credit availability declined in December 2015. A decline to the index is generally indicative of tightening lending standards. However, this month, a large part of the decline was driven by a technical issue related to implementation of affordable, low down payment, loan programs," Lynn Fisher, MBA's vice president of research and economics. "Many investors discontinued existing low down payment loan programs only to replace them with new iterations of similar programs that were discontinued."

The Index fell 2.4% to 124.3 in December, according to MBA. The index was benchmarked at 100 in March 2012.

Conventional mortgages saw the greatest tightening (-4.8%), followed by jumo (-24%), and government-backed products (-0.6%).

"(The product changes) introduced volatility into the December index reading and magnified the decline we saw over the month. Conceptually the underwriting changes that caused these issues represent an expansion of the credit, and are targeted at low-to-moderate income borrowers and first time homebuyers,” Fisher said. “A similar issue also caused changes to jumbo loan programs and had a tightening effect on the index while changes to government lending programs (FHA and VA) had an upward/loosening impact."



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