Lenders Begin Easing Requirements to Get a Mortgage

A closed watched index shows that mortgage lenders’ purse strings are finally loosening up after years of tighter rules on borrower eligibility. Providers are cautiously relaxing their requirements and even expanding the types of home loans they offer, according to the Mortgage Bankers Association’s latest credit availability index. The gauge showed improvements in all four of its loan categories last month. The upswings primarily reflect positive lender responses to federal government efforts to improve affordability in the residential real estate sector and to ease regulations. The initiatives range from Fannie Mae’s resumption of purchases of conventional mortgages with as little as 3 percent down to Freddie Mac’s plans to start similar 3 percent down loan purchases for mortgages closed on or after March 23. MBA chief economist Mike Fratantoni observes that “roughly 40 percent of investors” already have begun offering the Fannie Mae 3 percent down program. Further contributing to improved affordability is the Federal Housing Administration’s recent reduction of its costly upfront mortgage insurance premiums. This move, made in January, has the potential to expand eligibility for house purchases to thousands of buyers. | Read More