The lenders today have upped the ante on getting a home loan. Recent events on in the hosing market and on Wall Street, have caused the national lenders to take a hard look at there underwriting guild lines and whether or not there guild lines will satisfy there investors.
A recent report by the CRL (Center for Responsible Lending) (www.responsiblelending.org/issues/mortgage/reports/page.jsp?itemID=31214551) states that 2.2 million borrowers face foreclosure on subprime home loans. This translates to $164 billion due to foreclosure in the subprime mortgage market. CRL report also stated that 1 out of 5 subprime loans written in 2005 thru 2006 will fail.
With this type of prediction being made it is not surprising that a lot of subprime lenders are now increasing there requirements for subprime loans. Increased credit score requirements as well as changes to the types of loan programs that will be available.
Credit Repair and Credit Education will be the key for new first time home owners that are coming into the market place that have had credit issues in the past. It wasn't that long ago when a borrower with a 580 credit score, no reserves, some late pays and no rental history could get approved for a 100% financing with out any problem. Today underwriters are scrutinizing these types of files and although this type of borrower may today still be able to go to a limited number of lenders and get approved the chances are that 3 months from now it most likely will not be the case.
The ideal borrower in the near future will have a minimum credit score of approximately 620 with a credit profile for the last 6 months to a year.
What can we do to help - Lenders and Real estate agents need to get ahead of the curve when working with potential buyers. Credit seminars to educate borrowers are greatly needed. Get the people that want to buy and that have credit issues into a good credit repair program that offers credit education as well.
The current trend has been for a long time real estate agent find interested borrowers who are now scurrying to find a loan with no prep time for credit issues or credit education. It is not the real estate community fault, I have found in many case borrowers are not willing to to attend an educational forum to learn about the impact of credit do to other obligations. The truth of the matter is this could be the most important obligation they could make.
United Credit Education Services is committed to helping clients, real estate agents and lenders help educate there borrowers and improve there credit rating through educational tools as well as good old fashioned credit repair.
If your are a mortgage broker or a loan officer find out how you can utilize these educational tools for your subprime borrowers and provide them with much needed education as well as the opportunity of home ownership.
If you would like a tour of the back office to see the type of information and tracking mechanism that the client, agent or loan officer will have, please call me and i will walk you through the system.