Nation’s Housing
WASHINGTON — A closely watched index that tracks mortgage credit availability — lender requirements on credit scores, down payments and other key loan terms — has some good news for potential homebuyers: Things are finally loosening up.
After years of progressively tighter rules on borrower eligibility in the wake of the housing bust, banks and mortgage companies have begun modestly easing their requirements and even expanding the types of mortgages they offer.
The Mortgage Bankers Association’s latest credit availability index reported improvements in all four of its loan categories during January.
The improvements mainly reflect positive lender responses to government efforts to ease regulations and improve affordability in the housing market — all of which means an improved environment for mortgage shoppers.
Among the initiatives: giant investor Fannie Mae’s resumption of purchases of conventional mortgages with as little as 3 percent down. Freddie Mac, another major investor, is planning to begin similar 3 percent down loan purchases for mortgages closed on or after March 23.
According to Mike Fratantoni, chief economist for the mortgage banker’s group, “roughly 40 percent of investors” already have begun offering the Fannie 3-percent-down program. The guidelines for the Freddie Mac program are in lenders’ hands and there’s likely to be a strong rollout for it as well.
Also contributing to better affordability: the Federal Housing Administration’s reduction late last month of its costly upfront mortgage insurance premiums, a move that could expand eligibility for home purchases to thousands of buyers, according to industry estimates.
Virtually all lenders who work with the FHA program began offering the lower mortgage insurance premiums when the reduction took effect in late January. FHA insures loans with down payments as low as 3.5 percent.
read more: http://www.seattletimes.com/business/requirements-for-mortgages-are-easing/
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