Genworth Mortgage Insurance again surveyed mortgage industry executives at the 2016 Mortgage Bankers Association (MBA) Annual Convention in Boston and found that fewer now see mortgage underwriting standards as overly restrictive.
Lenders say it’s much easier to obtain a mortgage
Overall, 50 % of industry execs believe underwriting standards are overly restrictive, but that’s a drop from the 61% who said so at the 2014 MBA annual convention.
“This year’s survey data is consistent with the industry’s emphasis on improving credit access for more home-ready home-buyers,” says Rohit Gupta, president and chief executive officer at Genworth Mortgage Insurance. “While there is certainly more to be done on this front, we are pleased by the gradual progress we have seen over the past two years.”
Underwriting: 50 % of respondents believe overly tight underwriting standards are hurting home-ownership opportunities for U.S. home-buyers, while 12% feel that tighter underwriting restrictions are still needed. The remaining 38% believe the current standards are appropriate. Two years ago, 61% believed overly strict underwriting was harming the dream of home-ownership, 25% supported tighter underwriting restrictions and 14% viewed the standards as appropriate.
Affordability: Despite improving credit access, many potential home-buyers will still be priced out of the purchase market, however the industry is divided on the real cause: 37% of respondents cited high down-payment requirements; 33% cited stringent credit requirements; and 30 % cited a lack of single-family properties for sale.
Regulatory: 71% of respondents view GSE (government-sponsored enterprises, such as Fannie Mae and Freddie Mac) requirements on 97% LTV (loan to value) loans either negatively or neutrally. The remaining 29% view the impact as positive simply because they help mitigate risk for origination’s. These results suggest that respondents still think that more can be done to prudently expand the credit box.
Industry headwinds: 45% cited compliance burdens as the biggest threat to the real estate market over the next 12 months; 32% cited borrower usage of credit; 20% pointed to the current rising rate environment; and 3% cited insufficient progress on GSE reform.
Technology: 91% believe increased automation in the mortgage origination process will improve accuracy on application forms. An additional 8% haven’t seen a major improvement in either direction; and 1 % view automation as being a negative which will hurt origination’s.
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