Those in the business who know the mortgage underwriting guidelines might enjoy this video – here are my takeaways from today’s Caliber Home Loans talk:
- ‘Investors’ are banks, mutual funds, insurance cos., hedge funds, etc. who invest in steady streams of income. But they get more than the note rate – discount points and admin fees will bump up the annual returns to 5% – 8%. They are motivated to find ways to fund mortgages!
- Income-qualifying the self-employed buyers according to their 24 months of bank statements is an idea that should have been implemented by now – it is a fantastic way to qualify the actual income.
- Trended credit is a smart and gives benefit to those who pay off credit cards every month.
- Alternative credit is here to stay, and anyone who can verify they are paying on 3 lines of credit on time every month – one being rent – can get a mortgage.
- We accept that the government will want to subsidize the mortgage industry. The FHA allows for sub-580 FICO scores on FHA loans (which already accept gift money for down payments and multiple co-borrowers).
If banks weren’t “too big to fail” and subject to publicly funded bailouts when they make the wrong bet I’d be behind them 100%.
Because of the publicly funded bailout “safety net” I don’t agree with Banks taking on additional risk.
It’s like going to a casino with the money you’ve earned vs going to a casino with someone else’s money knowing that there will be limited repercussions on how you spend it. In which scenario do you think people would be more inclined to place longshot/crazy bets.
Steady state is not static.
Steady state assumes things keep moving along like now. Silly.
Static is what happens to the current portfolio when conditions change. Not a pretty.