Mortgage Industry "Pushed" To Lower Standards
As MarketWatch documents, it's all out in the open now. "Lenders are facing increasing competitive pressures, and the need to maintain and increase loan volumes may be driving the push to looser standards. 'The structure of the loans has really changed. What you're doing is leaving a lot more risk on that borrower,' said Brown, of the FDIC."
"Mortgage lenders kind of get caught in the middle saying, 'Well, you want us to push homeownership, so we're trying to create products that will help some more people to get into the house, but on the other hand you're really going to nail us when some of those people go delinquent and go into foreclosure, so what do you want us to do?'" MBA economist Doug Duncan said.
"For now, lenders are opting for a system that results in more loans to more consumers." Who is "pushing" you Mr. Duncan? And is it any surprise the industry "opted" to take the money and run?
"'A lot of times [homebuyers] come in and they attempt to get a more standard, plain-vanilla product, but because of their debt-to-income ratios, because of their work history and their employment status, they're led to these products because we as a lender are not able to approve them' otherwise, said Dave Herpers, with Amerisave Mortgage."
"It's not so much the customer is asking for these products off the bat, but rather are being led there based on their current circumstances."
"Getting more people into homes 'is the right thing to do from a policy perspective, if you do it correctly,' said Frank Nothaft, of Freddie Mac. 'That's always the big if.'"