Lender loan requirements are loosening up.
That's the takeaway from a key economic indicator, which tracks mortgage credit availability. The index, which curates down payment requirements and credit scores, among other key statistics, strongly suggests that lenders are generally more confident about to whom they will issue funds.
Not only are requirements becoming less stringent, many banks are offering different sorts of loans in an attempt to draw in new customers. This change comes after government regulations aimed at improving affordability in the housing market, and reflect an industry that continues to recover after the boom and subsequent bust that helped fuel the latest recession.
One such government program was Fannie Mae's resuming buying mortgages with as little as 3 percent down. Freddie Mac is likely to follow suit later this month, and there seems to be strong lender investment in both programs.
Many of the largest players in the loan industry are confident about the direction these initiatives are heading in. One person who holds such an opinion, Brad Blackwell, executive vice president of Wells Fargo Home Mortgage, the country's largest-volume mortgage originator, opened up about his predictions to the LA Times.
"Things are looking better for home buyers and refinancers — not only in terms of underwriting requirements but in the cost of credit as well," he explained. "Wells Fargo has been gradually opening up the credit box, in part because of helpful policy clarifications and changes at Fannie Mae and Freddie Mac."
This influx of new money requires loan management software capable of handling it. With such programs, managing all of the details of new loans is significantly less burdensome.