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Where does underwriting stand today in 2018?

June 7th, 2018 11:45 AM by Sam Kader NMLS# 130505

In general, underwriting standard continues to be cautious. However, we have seen some of underwriting standards are loosening slightly across most of the attributes of credit risk.

First factor - Loan-To-Value/Down Payment. In December 2014, Fannie Mae upped the maximum financing by introducing HomeReady with 3% down payment - Maximum Loan-To-Value (LTV) ratio of 97%. Freddie Mac followed a few months later by introducing similar program - HomePossible and HomePossible Advantage.

Second factor - Debt-To-Income ratio (DTI). In July 2016, Fannie Mae revised its maximum Debt-To-Income (DTI) ratio from 45% to 50%.

The third factor - Credit Scores have not changed. Investors share for Conventional Conforming (CC) with a credit score of less than 640 as well as the low and no-doc share were both down simultaneously. In contrast, the shares of new loans with an LTV higher than 95% and with a DTI above 45% have increased by 50% and 20% higher respectively.

In conclusion, we have seen some underwriting guidelines loosening in some areas but definitely not near the same level as pre-2006 crisis.

Posted in:Underwriting Guidelines, and tagged: Underwriting Guidelines

Posted by Sam Kader NMLS# 130505 on June 7th, 2018 11:45 AM

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Where does underwriting stand today in 2018?

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