My New Blog

Welcome!  This is my first mortgage lending Blog although not my first Blog experience.  

Please keep visiting my website for informative mortgage planning tips and market updates.  I look forward to providing a wonderful experience for you, your friends and co-workers.

Some Realtors and consumers stay on top of changes in the mortgage industry, but I thought it was important to share the following information that has been implemented by various lenders over the past 30 days. Many sub-prime and Alt-A lenders are closing their doors due to the nonperformance of their loan portfolio but mostly because they cannot find investors to buy their loans.

Sub-prime and Alt-A loans do not just include loans for credit challenged borrowers. These programs include Stated Income/Stated Asset, No Income Verification and No Documentation loans also.

As I have said before, it is critical that you deal with a lender that has the ability to do FHA loans as these loans still allow for previous credit issues and manual underwriting by a person – not just an automated underwriting system. Many subprime loans, classified as such due to credit issues, will be approved using FHA and give the borrower a good interest rate.

It is also important that you work with a lender that has the reputation of delivering at closing what they disclose up front. This will be invaluable for Stated Income, No Income Verification and No Doc borrowers. The last thing you want is to show up at closing where the lender has used a bait and switch tactic or the lender has brokered the loan to a company that closes their doors the day before closing – this is happening in our industry today!

Below are just a couple of the drastic changes you need to be aware of:

• Stated Income loans are now only available for self-employed borrowers (salaried and non-employment income borrowers no longer allowed). Will now require higher credit scores that previously offered. No Doc loans will also require higher credit scores.

• 100% loan programs are still available but required MUCH higher scores. In the past we were able to get these loans with 580 credit scores through our sub-prime lenders. With full documentation the score requirement is now 620-640 and 660-680 on stated income. HOWEVER, CTX Mortgage does offer loan program – My Community 100 – that allows for manual underwriting when a credit score is under 620. In fact, we have approved borrowers with no credit scores under this program.

Common sense underwriting does exist . . . at CTX Mortgage. Our underwriters are not dependent on automated underwriting systems or credit scores when a borrower has been affected by isolated circumstances out of their control (divorce, medical, identity theft, business failures, etc.).

PLEASE SHARE MY BLOG WITH YOUR FRIENDS, FAMILY AND CO-WORKERS as these changes do affect loans already in process.  Lenders are not honoring their pre-approvals on these loan types.