Lending standards loosening? Major price rise expected?

[Hersh M.]

Source - http://themortgagereports.com/21442/low-down-payme...

"Housing starts have been fueled by rising rents, cheap mortgage rates, and an abundance of low- and no-downpayment mortgages.

The 80/10/10 piggyback loan has been in high demand of late, and buyers are finding the Fannie Mae HomeReady™ home loan to be a worthwhile alternative to FHA lending.

The math for "Should I rent or should I buy?" has shifted and this month's housing starts data reflects that.

It's an excellent time to shop for a home."

"The good news is that mortgage approvals are getting simpler.

In addition to reducing their loan approval standards, mortgage lenders have recently lowered minimum credit score requirements, made concessions for self-employed income, and granted leniency on loans which "make sense".

Furthermore, there are more low- and no-down payment loans available than during any period this decade.

In addition to the Conventional 97 program and HomeReady™ programs, which are backed by Fannie Mae and require just 3% down, demand for the FHA 96.5% LTV program is high, as are requests for "piggyback loans".

There are also the VA and USDA loan programs -- both of which allow 100% financing."

[Chris Mason]

The only firm claim about lending standards made in the bits of OP article herein quoted were about FNMA HomeReady and 80/10/10.

FNMA HomeReady is prudent. There's no stated income or stated assets. Everything has to be documented. It allows you to use rental income from in-law units if you get a lease signed and prove a security deposit was made, which honestly all loan programs need to do for in-law units. If you can prove that Sally has been living with you for 12 months and paying you rent, you can use that as a compensating factor for high DTI - or you can just go FHA but that financing isn't as good. All FNMA HomeReady loans I've done are for folks that could have qualified for FHA 3.5% down (which hasn't changed much in years), but want better financing with PMI that goes away once they hit 20% equity. FNMA HomeReady isn't a story of putting people into houses they don't qualify for, it's a story of offering FTHB a better deal than FHA 3.5% down. Overall FNMA HomeReady has higher standards than FHA. The first HomeReady loan I did was actually for a BPer wholesaling to an end-buyer that didn't want hard money.

80/10/10 never really went away, still requires 10% down, and has more stringent FICO and DTI requirements than just about anything else out there. I tell them to have a plan in place to nuke the 10% HELOC ARM asap, and think of that as saving for a down payment after the fact. This isn't a product for scrubs, 80/10/10 is for high income people relative to what they are purchasing, that got half way there with the first 10% and just don't want to wait to save that second 10%. It allows us to go up to about $1.5m purchase price with 10% down (the eyes of those not in the Bay Area just got wide, I do realize that), but again you damned well better have strong income relative to that price point (as in, you could qualify for a $2m house if you had 20% down), few debts, and excellent credit - or it's not going to happen.