Welcome!




Expand Your Education with These Courses from
The Psychology of Consultative Selling: Skills for Sales Success: Part Four.
Accredited Buyer's Representative.
ACE: Purchase Reverse Mortgage Course.
At Home with Diversity.
Bundle 3: CIPS Institute (US Version).

The Mortgage Professor: Some Well-Off Borrowers at a Disadvantage

Have a comment on this article? Share on Facebook!

By Jack Guttentag

(MCT)—In a recent column, I pointed out that mortgage lenders today can make a loan with only 3 percent down to a borrower with a steady job but a credit score of only 570, and have it insured by the Federal Housing Administration. But lenders can’t or won’t accommodate a self-employed physician who can’t adequately document enough income, even if the physician can put 30 percent down and has a credit score of 800. Considering that the likelihood of default is at least 10 times higher on the first mortgage, this is insane.

The insanity is best viewed in the broader context of how the current market differs from the one we had before the financial crisis. Some types of borrowers do better in the current market while others, such as the physician mentioned above, fare much worse.

How borrowers have fared depends heavily on their risk status.

—Borrowers seen as low-risk: The market is even more receptive to this group than it was before the crisis. Loans are as readily available to them today as they were before the crisis, but the rates are lower. These borrowers are better off now.

—Borrowers seen as moderate-risk: Loans are available in the current market, but the rate spread between moderate-risk and low-risk transactions is larger than it was before the crisis. Hence, these borrowers don’t enjoy the full benefit of the unusually low market rates.

Continue Reading 1 2 3 4

Want instant access to great articles like this for your blog or newsletter? Check out our 30-day FREE trial of REsource Licensed Real Estate Content Solutions. Need easy stay-in-touch e-Marketing solutions too? Try Pop-a-Note for 99 cents!
Join RISMedia on Twitter and Facebook to connect with us and share your thoughts on this and other topics.




Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Copyright© 2014 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com

Our Latest News >>