OF YOUR PIPELINE
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Never miss an important date or lose track
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Milestone Updates: Borrowers are automatically alerted as
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Customizable Interface: MorPipe’s dynamic system allows you
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Dynamic Vault: All funded files are automatically archived into a
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on Month, Rate, Program, Term and other customizable metrics.
Easily find those clients ripe for a refinance or program change.
report — and avoid the issue of a monthly payment
that does not fully amortize the student loan because
of an income-based payment adjustment.
Independent mortgage companies also can work
with dozens of investors that have a variety of loan
programs that are not underwritten to standard
Fannie Mae or Freddie Mac guidelines. These programs include loans that are customized to deal with
medical professionals or self-employed individuals
who are good credit risks but perhaps structure their
businesses for tax purposes in ways that do not align
with traditional underwriting guidelines.
There is a reason that independent mortgage companies are taking a larger share of the market. Their
more customized approaches to underwriting and
the breadth of mortgage loan products they can offer
are exactly what many millennials need if they want
to repay student-debt obligations while simultaneously investing in a home as part of a plan for future
financial stability. ■
For loans following Fannie Mae or FHA guidelines,
however, a lender must use one of the following
options to calculate the debt payment for DTI:
■ ■ 1 percent of the outstanding balance, which is
typically higher than the projected monthly repayment amount;
■ ■ The monthly repayment amount reported on the
credit report, assuming it fully amortizes the loan; or
■ ■ A calculated payment that will fully amortize the
loan over the repayment period, which calls for
calculating a payment with no forgiveness after
20 or 25 years.
If the loan is amortized over 20 or 25 years, and
the existing monthly payment will pay it off, then it
is fully amortized. For millennials on income-based
student-debt repayment plans, however, their current
payment will not pay off the debt in that time frame,
so it won’t be considered to be amortized, which can
prevent them from getting the mortgage they desire.
Filling the void
All is not lost for millennials who wish to purchase
a home, despite mounting student-loan debt. Independent mortgage companies can make it easier for
millennials to buy their first home.
According to the Federal Reserve, the percentage
of home loans issued by independent companies not
affiliated with banks has climbed sharply in recent
years, reaching 47 percent in 2014. This figure could
increase as more millennials seek to make the leap to
homeownership because these independent mort-
gage companies can be more flexible.
Independent mortgage companies don’t carry the
burden of having to be one of many business lines,
which, in the case of larger banks, can create legal
and reputational risk for the entire organization.
Independent mortgage companies can leverage
individual agency guidelines to provide increased
flexibility. They don’t have to play it conservatively
or rely on internal credit overlays that impose stricter
lending standards than the various agencies require.
A large bank may take Fannie Mae guidelines and
Freddie Mac guidelines, for example, see where they
overlap and where they differ, and then take the more
conservative of the two approaches. This creates a
barrier for millennials who might actually be eligible
for financing under one or the other of the two sets of
Millennials seeking customized loans have access
to a breadth of products from independent mortgage companies. For example, a nonbank can make
a decision to use Freddie Mac guidelines that enable
the use of student-loan payments per the credit
<< Smaller continued from Page 140 “Millennials seeking customized loans
have access to a breadth of products from
independent mortgage companies.”