Fannie Mae's third quarter 2015 Mortgage Lender Sentiment Survey™ reveals that more lenders report easing of mortgage lending standards across all loan types. Great news for home buyers.
For example, recently Chase Bank eased the lending requirements for its jumbo mortgages, which tend to be loans in excess of $417,000 in many markets and $625,500 in more expensive areas. A potential buyer now only needs a credit score of 680 and a 15% down payment to qualify for a maximum loan amount of $3 million for a primary-residence home. Borrowers used to need a 740 score and put 20% down. By easing its standards, the bank is hoping to gain more customers.
California is by far the biggest lending state when it comes to jumbo mortgages—both in dollar amount and number of loans. More than half of Bank of America’s jumbo lending is originated and closed in California, and dollar volume from January through August 2015 was up 20% over a year ago.
Fannie Mae announced its new HomeReady mortgage that will replace MyCommunityMortgage, Fannie’s previous affordable lending product. The latest product is designed to help creditworthy borrowers with lower and moderate incomes access an affordable, sustainable mortgage.
Easier credit may sound like a recipe for an automatic rerun of the housing crisis. Some critics express concern over a new housing bubble. But it’s still a far cry from the heady pre-crisis days where lenders would often waive downpayments entirely and not bother checking borrowers’ claims regarding their credit-worthiness. Unlike the catastrophic housing bubble seen at the start of this century, home price frothiness today is not being fueled by free and easy mortgage credit.
Are you concerned over a new hosing bubble? Should Mortgage Lending Standards Ease?
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