Several lenders announced new guidelines today in effort to stem loses from poorly performing Alt-A and subprime mortgage loans. The new guidelines will ensure that borrowers are able to afford their mortgages and prevent future foreclosures.
- Mortgage applicants must have 20/20 vision. Corrected vision with contacts will require a .5% rate add-on. Glasses are not permitted.
- Borrowers must have three FICO scores above 800. The borrowers’ parents and first cousins must also have FICOs above 720.
- DNA, retina scans, and fingerprint samples will be collected on all full documentation loans
- Private Mortgage Insurance (PMI) will be required on all mortgage loans regardless of Loan to Value (LTV). Applicants can substitute their first born child’s future earnings in place of PMI.
- Thirty years of cash reserves are now required on all loans
- Debt to Income ratios will be limited to 5%
- A maximum LTV of 20% will be allowed on all loans. Borrowers may get a second mortgage for a maximum combined LTV of 21%.
- Salary.com is no longer acceptable for verification of stated income loans. Stated income applicants must now be listed on the Forbes Richest 100 list.
- Five appraisals are now required. All comparable properties must be 100% identical to the subject property and within .01% of the appraised value. Value must be verified by Zillow.com
- Interest rates will be based on whatever makes up the loss on all the other dumb ass loans we made over the past few years
Pretty funny Russ.
Given some of the guideline changes, I don’t think I am far off! Sanity will soon return…
As my kids would say OMG LOL! This market is changing by the hour. You may be closer than you think very soon.
So you tell people not to go to a mortgage lender unless they have 3 years experience…where do you suggest these newbies get the experience if you are suggesting that people not use them. There is nothing wrong with being a newbie when you have a good support staff.
I am relatively new to the mortgage busineee ( 3 years) and I would like to say that I did not follow the band by pushing adjustable rates or suggesting risky loans to my clients. I also took the time to educate myself about the mortgage business in an effort to become an expert in this field. I truly believe that too many of us lost sight of the fact that our clients are people, not just a deal to close and a check to collect. I must admit that I lost clients because of the fact that I was honest, upfront and would tell a client if their situation needed some work and they needed to make some changes to improve their situation. I also had real estate agents that would not send their clients to me because I would not push a client up to the 50% debt ratio or ignore improvements that could be made to give me the opportunity to offer their client better rates, terms, etc.