Score
Your
Clients
More
Points
Use all available tools
to ensure credit scores
meet today’s tough limits
Normally, housing leads the conomy into recovery. This time around, however, housing
has shown no signs of providing the
power to get things moving. That’s not
to say that 2011 wasn’t a decent year. In
august of this past year, the Mortgage
Bankers association (MBa) predicted
that residential mortgage origination
volume would be $100 billion higher
than earlier anticipated at $1.1 trillion.
although this is good news, it’s likely
that the higher-than-expected volume is
homeowners taking advantage of low
mortgage rates to refinance existing
loans. That trend may now be nearing
an end or at least starting to taper off.
as the new year unfolds, mortgage
brokers and originators must do every-
thing they can to close loans despite
tight lending requirements. These lim-
its have made clients’ credit scores
more critical than ever, and brokers
and originators should take advantage
of existing tools to maximize scores to
secure funding.
Forecasting trends
Looking ahead, there is nothing on the
horizon that would indicate a significant
increase in interest rates this year. In addition, home prices in most areas of the
country (with the exception of certain areas like new york, California and Washington, D.C.) are expected to remain at
low levels, making this a true buyers’
market. nonetheless, the MBa has predicted that mortgage companies will do
only $931 billion in originations in 2012,
the lowest since 1997.
Tighter lending standards have made
mortgages harder to get lately. That
doesn’t look to change anytime soon.
Lenders are continuing to raise the bar
on their documentation and credit-score requirements.
The contrast between lending standards in 2006 and today is stark. Five
years ago, major lenders typically required a FICO credit score in the mid-
500s or higher for loans. Today, that
requirement has increased almost
100 points. Large lenders are requiring scores in the mid-600s for Federal
Housing administration (FHa) loans,
which is beyond what the agency itself requires.
Mortgage companies are tightening
standards on FHa loans partly because
of the higher costs they face in servicing delinquent accounts. Fannie Mae
and Freddie Mac have adopted tougher
guidelines for loans, as well.
Tools to help
Fortunately for mortgage professionals,
a variety of scoring tools and technologies are available to help them close
more loans. These scoring tools can
analyze credit files and alert mortgage
professionals to opportunities they
By Greg Holmes
National director of sales
and marketing
Credit Plus Inc.
may have otherwise overlooked. Scoring tools in many cases suggest positive actions that applicants may take to
possibly reach their target scores.
Because every point counts in the
current lending environment, it’s worthwhile for mortgage professionals to
alert applicants to problems with their
credit scores, like misreported, inaccurate or outdated information; incorrect
account status or balance; and removal
of derogatory information or accounts
reported in error. Taking a second look
at an applicant’s credit score can result
in a follow-up plan for the broker and
the applicant to review.
continued on page 56 »
Fraud still looms
Mortgage fraud will continue to be
a concern for mortgage professionals this year. a large increase in the
number of suspicious activity reports
(Sars) filed with the Financial Crimes
Greg Holmes is national director of sales and
marketing at Credit Plus Inc., in Salisbury,
Md. Credit Plus has been a provider of credit
and mortgage-information services since
1928. reach Holmes at beyondbundled@
creditplus.com.
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for a more concise list of products
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www.jmaclending.com
