Since the mortgage crisis when loans became almost impossible to obtain, Metro Atlanta mortgage lenders have begun to loosen standards again. This begs to ask the question, will lenders ever learn their lesson from loose lending practices?
Recently, the Federal Housing Administration (FHA) announced changes they hope will encourage banks to give more home loans to worthy but weaker borrowers.
The government has extracted billions of dollars in penalties from lenders that made mistakes on loans to borrowers who later defaulted. The errors ranged from small mistakes to ones that affected the riskiness of the Metro Atlanta mortgage they chose to underwrite in the first place.
Some banks, believing the penalties are too harsh relative to the errors made, have pulled back from originating a Metro Atlanta mortgage backed by the FHA and argue that the broad "certification" they must make when originating a Metro Atlanta mortgage should be limited to significant errors.
Will FHA Changes Help Those Trying to Get a Metro Atlanta Mortgage?
The FHA’s attempt to change the provision shows the tightrope policy makers and regulators are trying to walk. While they want to hold lenders accountable for crisis-era mistakes and retain recourse should the Metro Atlanta mortgage go bad, they also want the banks to extend loans to some consumers who have been largely shut out of the Metro Atlanta mortgage market since the crisis.
Lenders typically have pulled back on FHA lending by having more stringent requirements than what the FHA would allow. For example, even though the FHA will guarantee loans to borrowers with credit scores of as little as 580, on a scale of 300 to 850, a bank might not give a Metro Atlanta mortgage to borrowers with a score below 640.
Meanwhile, Metro Atlanta mortgage rates remain near a two-year low, even though rates inched up slightly in the past few days. Freddie Mac says the average rate on a 30-year fixed rate mortgage is now around 3.69 percent, that's up just a fraction from 3.59 percent a week ago. A year ago, 30-year rates averaged 4.28 percent.
We'll continue to monitor the FHA decisions and how they may affect (negatively or positively) getting a Metro Atlanta mortgage as we continue moving through the housing recovery in 2015.
In the meantime, you can get more information about news that may affect the Metro Atlanta mortgage market in our section on Atlanta Mortgage Info to your right under Atlanta Real Estate Categories.
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