228373 Resource 213695 213904 1 1236711797129 1254092899881 Controlled What We Are Hearing: The Shifting Sands of Originations Guidelines

Despite apparent simplification in mortgage products, originators face challenges in the standards for loan acceptance, which exceed the definitions of DU and LP. These standards are under constant change.

Recently the mortgage news has been dominated by information on defaults and foreclosures in servicing, despite apparent concentration in product types, and constantly changing, mostly tightening, guidelines in originations. On the mortgage originations side, a recent examination of originated loan types over the past 6 months by a major LOS provider’s banker customers showed that 51% of loans were “conventional”, 44% were FHA and there’s precious little percentage room for much else. At the same time, an often heard observation is that approvals from DU and LP are required but are not sufficient to originate a loan. Whether one is originating in the retail channel or in the Amazing Shrinking Wholesale Channel, FICO requirements, DTI thresholds and documentation standards from investors are often more conservative than those that DU or LP, or their respective agency's guidelines require. Just last week a quick sampling of <a title="Rob Chrisman's Mortgage Daily News" href="http://www.robchrisman.com/a1236319200.htm" target="_blank">Rob Chrisman's e-letter</a> noted that "GMAC Bank has revised the minimum credit score requirements for all FHA transactions and will no longer accept a credit score below 580, regardless of the underwriting method (AUS or manual)", "CitiMortgage Correspondent announced new MI FICO and LTV criteria, effective 3/9", and "Countrywide, who is taking the BofA name on April 1, will adopt the 620 minimum FICO score effective March 6th regardless of AUS." All this change in expectations of and delivery obligations to investors raises either the costs of delivery or the prospects of buy-backs or both. There are three strategies we see mortgage originators implementing. Some just get out - either permanently, or until the noise dies down and the world makes sense again. Some have added staff in underwriting and in the lock desk/secondary area to review and re-review applications to make sure they meet "today's standards." Some are applying technology that continuously and repeatedly performs the review and re-review of applications rather than relying on their highly skilled underwriters and secondary staff, whom they save for the most difficult of cases and labor. To the extent you are finding strategy one or two unsatisfying to your goals, Overture would like to discuss using Mozart for Originations as your solution for strategy number three. "The only way to make sense out of change is to plunge into it, move with it, and join the dance" - Alan Watts, American (British-born) writer & philosopher (1915-1973)   10 application/xml false "What We Are Hearing" AUS Automated Decisioning Buy-Backs DU Eligibility FICO Guidelines LP Mortgage Finance Mozilla/4.0 (compatible; MSIE 8.0; Windows NT 5.1; Trident/4.0; .NET CLR 1.0.3705; .NET CLR 1.1.4322; Media Center PC 4.0; .NET CLR 2.0.50727; Zune 3.0; .NET CLR 3.0.4506.2152; .NET CLR 3.5.30729) 127.0.0.1 127.0.0.1 $Admin 173.160.40.189 false true false false true 213695 blog blogsite/Overture/web