Many borrowers can’t take advantage of today’s historically low mortgage rates because of strict underwriting requirements.
But as the housing market increasingly appears to be mending, lending requirements will begin to loosen, but will be nothing like they were prior to the real estate crash, which crippled the economy, said Tony Hutchinson, a senior policy representative for the National Association of Realtors in Denver today.
Hutchinson was one of the speakers on a panel called “Mortgage Insurance Woes – Fannie, Freddie and PMI,” at the National Association of Real Estate Editors conference being held at the Brown Palace hotel. “You can understand why lenders were getting conservative,” after the crash, Hutchinson said. He doesn’t think they will ever be as loose as they were doing the go-go days, but they are too tight today.
“I think underwriting is moving to the middle ground,” he said. However, Dan Walker, a senior vice president at United Guaranty Co., said it “not unreasonable” to expect consumers who take on a line be able to repay them. Mike Zimmerman, a senior vice president at MGIC Investment Corp., said that in the 2000s, loans were made based on homes appreciating. Those days are gone, he said. He said any single risk factor, such as a low FICO score or small down payment, can be addressed. Underwriting becomes more complicated when various risk factors are combined, he said.