The sub prime market place is continuing to tighten its lending guild-lines/requirements (whether published or not). In one particular case, Accredited Home Lenders recently denied a loan that met underwriting guild-lines but corp. underwriting and management stated "they did not like the loan".
I have had a great relationship with the AE and the UW department for the last 3 years. When this particular AE tells me he can do the loan and it met the guild-lines for the specific program, he has delivered in all cases. In This particular case the borrower had a 619 mid credit score on a program that required a 580 mid for 100% LTV. But they decided based on a "rent-free" history (rental history not required per guild-lines) that they would not do the loan.
For the last 4 or 5 years, maybe longer we have had great success with getting sub prime borrowers that were buying homes and needed 100% LTV closed as long as the mid score was 580 or better, you could always find a home for the loan.
With the recent events in the market place, Ownit Mortgage filing for bankruptcy, Sebring closing its doors, MLN closing shop, and investors on wall street losing it appetite for the sup prime market do to the fear of increased default on loans in upcoming years, it is becoming ever more important for lenders and brokers to work with sub prime clients further upstream to make sure credit issues and credit scores are elevated to over compensate for past credit issues and any recent payment history is good.
If a borrower has had issues in the past and they are resolved, it is extremely important that they maintain a good recent credit history. Any late payment history will be open to scrutiny in today's market place whether it is in the guild-lines or not.
I understand and agree with the need for tighter UW guild-lines to protect the housing market, but what I don't agree with is a lender deviating from published guild-lines.
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