Morty offering FHA loans amid challenging market

The move comes amid a significant increase in government-sponsored lending

Morty offering FHA loans amid challenging market

Morty, the online mortgage marketplace, has joined the growing ranks of lenders offering FHA loans in meeting the affordability needs of homebuyers in a time of higher interest rates fueled by inflation.

The new product offering provides customers with access to more flexible down payment and credit score requirements. The move comes at a time when FHA loans have increased in volume by 6.2% year-over-year, according to the National Association of Realtors. For its part, Morty has seen a three-fold increase in the number of homebuyers seeking options other than conventional loans. Morty officials cited an increase in debt-to-income rations and a decrease in average FICO scores as further impetus for the FHA launch, which offers buyers the option of down payments as low as 3.5% and more lenient credit score requirements.

Mortgage Professional America reached out to Nora Apsel, Morty’s co-founder and CEO, to learn more.

“Since we launched Morty in 2016, our main focus has been conventional purchase loans for primary homes,” Apsel told MPA. “Over the past year, buyer needs have evolved as higher rates have compromised affordability. Adding FHA loans helps us address those affordability challenges head-on as we expand our marketplace with more options.”

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She expounded on the increase in demand seen of late that prompted the FHA loan launch: “To give you a sense of what we’re seeing currently, since January there’s been more than a 3x increase in the number of customers coming to Morty with needs beyond more common conventional loans,” Apsel said. “Rising rates have had a significant impact on affordability, leading more buyers to consider FHA loans. Conventional loans remain the most common, but the low credit score and down payment requirements mean that FHA is a stronger fit for more homebuyers in this environment. This is also reflected in the market data, which shows that FHA loans have increased in volume by 6.2% year-over-year.”

The backdrop to the launch is a sluggish housing market exacerbated by rates that have been incrementally increased as the Fed attempts to tame inflation, Apsel suggested: “The state of the market means that loan applications are down for everyone across the industry,” she noted. “Since Morty is an online marketplace and broker, rather than a lender, we are uniquely positioned to serve buyers in the current market. For example, the range of options and lenders in our marketplace means we can still offer homebuyers a competitive edge when it comes to pricing, even if rates are up overall. We also can offer tools like float-down options and programs like HomeReady, making lower rates more accessible.”

FHA loans are live and integrated directly into the Morty platform, Apsel said.

The CEO hinted at the possibility of further product launches as lenders seek to accommodate the needs of buyers amid challenging times. “We’re actively working to expand our marketplace in order to meet the affordability needs of today’s homebuyers and provide them with the right tools for navigating the current market,” Apsel said. “Just this year we’ve launched a range of new loan options and affordability tools, including HomeReady, jumbo loans, ARMs, float down options, and a 14-day closing program, Quick Close Advantage. The focus is on addressing the affordability challenges buyers are experiencing, and that will be the driving force of our continued marketplace expansion in the coming months.”

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Morty noted its expansion into FHA loans marks an additional step in a year of marketplace and state footprint expansion. This includes the launch of HomeReady, jumbo loans, ARMs, and float down options, a 14-day closing program, Quick Close Advantage, and more earlier this year. Morty is now licensed in 46 states plus Washington, DC.

In a prepared statement, Morty’s VP of Mortgage, Robert Heck, buttressed Apsel’s suggestions that further products aimed at affordability could be launched in the coming days: “Our marketplace model enables us to provide unbiased expert advice and access to affordable options that can help buyers navigate the current market,” he said. “We’re actively pursuing new lender relationships and affordability partnerships that will allow us to continue being a one-stop shop for anyone looking to explore homebuying.”

The platform has experienced brisk growth since its recent founding. At its inception, the firm was licensed in five states. Now, the company is licensed in 44 states, with plans to do business in all 50 by year’s end, Heck told MPA in a previous interview. Moreover, the company has grown from its original five-employee operation to now hiring some 70 people.