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Last Thursday the mortgage lending industry was hit with a shockingly abrupt rate increase due to a Wall Street “risk-adjustment.” This risk adjustment translated into across the board rate increases, particularly on non-conforming and non-A paper loans. What is this risk-adjustment and how does it affect mortgages at a consumer level? The answer is buried under a selling and buying cycle among Wall Street and lending. Basically, Wall Street has now accounted for the increased mortgage defaults and continuing housing slump; resulting in an allocation of additional interest points needed to compensate for this higher risk. For a different take … (0 comments)
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