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We’re seeing lenders dropping overlays to get more business, but is this okay?  Let us know your thoughts.



additional comments on
"Lenders Dropping Overlays a little Scary"

  1. Richard Purney says:

    As a broker I have a few lenders that do offer opportunities at 580 credit scores. Although these are not the easiest deals, they do get closed. That being said, in my experience today’s 580 credit score is not the same credit profile as a 580 score 10/15 years ago.

  2. Bernie says:

    The changes were not in 2001 2002 or 2003. This all started in 1998 when Clinton wanted every person in America wanted a home he was going to make sure they got the American dream. Barney Frank diluted the rules the guidelines and his boyfriend took over Fannie Mae because the previous President of Fannie would not do what Frank wanted. So Frank had him thrown out and his boyfriend took over. I am sorry but what happened 2001 2002 and 2003 was the start of a balloon being blown up past what it could hold. When they called in 2006 for Fannie and Freddie’s books to be audited, a demand made by Greenspan and President Bush, Frank refused a direct order from the President knowing full well that the Democrats would be blamed for the collapse Frank knew was coming.

    1. SarcasmDetector says:

      Yes, but a certain faction of America blamed everything on George W. Bush. We all know he had little to do with it. One woman I met at a mortgage conference said ‘but he was in charge’. I laughed at her and told her she needs to learn how the federal government works, because Bush was not a dictator and couldn’t just demand things.

  3. KP says:

    It’s not lenders dropping overlays, it’s the GSE’s. As of Monday, Fannie AUS will be giving approvals at 50% DTI. And Freddie always has except for their HP program. Let’s think about what that really means? We’re talking 50% of gross income.
    FHA gets an approve at 56%.
    Guideline changes coming out are mostly a loosening of requirements.
    So lenders can “drop” their overlays but they wouldn’t be able to if permission didn’t come from the top.
    Whether this is a sign of things to come?
    The difference between then and now is the majority of people are not buying because they want to take advantage of rapid appreciation. They are looking to stabilize their household by having a monthly payment they can depend on.
    Rents are skyrocketing, people are being forced to move further and further away from their job/income source.
    My city has a 2% vacancy rate for rentals.
    So when the values stop increasing, I don’t see a lot of people abandoning their houses to jump back into the rental market. Yet.
    And there is nothing wrong with 100% financing. VA does it to great success.
    But their success is because they analyze net and residual income.

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