Expect mortgage lenders to finally conquer their fear of repurchases in 2016 and ease their standards, but whether those changes will be enough to spur major growth in volume is the big question.
The sources of that doubt are several likely drags on the market: higher rates, higher costs and mixed conditions in the secondary market.
On the plus side, lenders seem increasingly comfortable with Fannie Mae and Freddie Mac’s demands.
“We fully understand when we might be buying back a mortgage if we underwrite to their [expanded] guidelines,” said Scott Haymore, TD Bank’s head of pricing and secondary markets. “I think they’ve made it very clear.”
Both the government-sponsored enterprises, and the Federal Housing Administration that insures loans sold by into Ginnie Mae securitizations, have been encouraging broader lender underwriting and plan to continue to do so next year.
The GSEs have limited lenders’ liabilities […]