3% down mortgages roll out at breakneck speed


3% down mortgages roll out at breakneck speed

WASHINGTON – Jan. 5, 2015 – Lenders' quick adoption of a recently announced decision to allow 3 percent downpayment mortgages created a nice holiday gift for the mortgage industry and homebuyers.

Lenders say they've sped up the normally cumbersome process because some things have changed. For one thing, they're able to get the new product out faster because many lenders now sell their loans directly to Fannie Mae and Freddie Mac instead of aggregators or wholesale lenders that have historically attached extra lending guidelines – called overlays – to the loan requirements.

Also, the qualified mortgage rule (QM), while stricter, has made it easier for lenders to assess quality control, underwriting and risk decisions because there are now fewer gray areas that require study.

Still, most consumers don't yet know that a 3 percent downpayment mortgage product exists – yet. The mortgage industry must now start to make consumers aware that the low downpayment loan products are available.

"If you want to push it, market it and get it out there, I think you should absolutely be able to increase your business if you market it to your clients and real estate agents and everybody else," says Michael Deery, president of San Diego-based mortgage brokerage Citywide Financial.

Source: American Banker (12/26/14) Finkelstein, Brad

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