Out with the old in with the new?

Written By: Glenn Michaels

The mortgage industry ended 2013 with no change in loan limits beginning in 2014.

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On January 10, 2014 Qualifying Mortgages begin, but there are still lenders out there that will do non – Qualifying Mortgages.

The more things look like they change the more they do not.

In 2013 HUD announced several different scenarios where the borrower now has to be qualified manually instead of utilizing Desk Top Underwriting or Loan Prospector with TOTAL.
Underwriters and lenders in a number of situations no longer can hang their hat on DU or LP with TOTAL. Now underwriters must really underwrite their loans and have strong justification for approving mortgage loans that were downgraded to “Refer” or were not even allowed to be underwritten through automation.

If the economy continues to improve then interest rates will continue to increase. The old adage, “good news is bad for the bond market and bad news is good for the bond market” is still true. The rates will inch up every time we see signs of economic improvement. If by chance the economy declines then the rates will inch downward. Obviously no one knows what will truly happen. In my opinion and from what I see the economy is showing signs of recovery and if the trend continues then the interest rates will inch up.

It appears that home prices are increasing in most of the country, even in areas impacted by Super Storm Sandy. It will now cost more for someone to purchase home as the values are increasing.

Housing Inventory, some believe it will remain high and others do not believe so. I believe it depends on where the property is located. After all the old adage, “location, location, location” is still very important as far as values, and inventory.

Where I reside many homes were damaged by Super Storm Sandy. Many homes are up for sale, some rebuilt, some not rebuilt. The values are not moving up greatly in Super Storm Sandy impacted areas. The inventories are very high and many buyers are reluctant to purchase a home that had storm damage due to flooding.

If HUD does not reduce the costs to obtain a FHA mortgage by altering the Upfront Mortgage Insurance Premium and the Annual Mortgage Insurance Premium conventional lending may be on the upswing. However, now that Fannie Mae will no longer purchase mortgage loans with 3% down, FHA and VA will probably be the only two programs left with zero down for a VA loan or 3 ½ down for a FHA loan. If you want to put minimum down then you have no choice but to go with the higher costs.

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Home Equity Lending should increase due to increase property values and better equity positions for many borrowers. The Prime Lending Rate is still historically low. Therefore borrowers should not be walloped 

About The Author

Glenn Michaels - As an NAMP® staff writer, Glenn Michaels is a mortgage underwriting instructor for Mortgage Underwriter University (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years. If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org.

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.