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Lenders Relax Standards

As home prices continue to rise, some mortgage lenders are loosening their underwriting standards so borrowers can purchase property sooner. “The reality has sunk in that there are buyers out there who will be able to buy homes and make the mortgage payments,” said William E. Brown, president of the National Association of REALTORS®. told mortgage industry news website OriginatorTimes.com. The industry is “trying to give them more options to buy a house,” he added.
Mortgage giants Freddie Mac and Fannie Mae are rolling out new programs to spur homeownership, and some lenders are moving to relax standards to avoid losing business as home prices and mortgage rates rise, says Guy Cecala, publisher of Inside Mortgage Finance. “If your business is going to drop 20 percent, you need to come up with ways to offset that,” he says.
Underwriting standards still remain stricter than in the past. Though borrowers have more loan options, such as 3 percent down mortgages, they typically must meet credit requirements to qualify.

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