Review Mortgage Lenders

American Mortgage Lender

Sun American Mortgage - Reverse Mortgage Lender

Sun American Mortgage is a lender, seller and servicer of the government insured Reverse Mortgage. Over twenty years ago, we closed the first ...

Getting Rich on Government-Backed Mortgages

For first-time purchasers, many nonbank lenders rely on the government’s affordable financing, backed by the Department of Veterans Affairs, the Department of Agriculture, and, most of all, the Federal Housing Administration. Lending under these programs differs in some important ways from the subprime mortgages of the aughts. Unlike the usurious loans of the past, federally backed mortgages can charge low rates—often less than 5 percent—and require documentation of jobs and income. Jonathan Gwin, American Financial Network’s chief operating officer, says delinquencies are low for these kinds of loans. And overall, it’s still difficult for many people to get a mortgage. (Only 3.5 percent of new loans are to people with credit scores below 620, compared with 15 percent in 2007.)

Nonbank mortgages make up about 80 percent of the loans for borrowers insured by the U.S. government. The banks have largely abandoned that market because of tighter scrutiny. As before, lenders use lines of credit to fund the loans, which are packaged into securities—in this case, Ginnie Mae bonds, common in mutual funds and pensions. In the subprime debacle, private investors risked losses if borrowers defaulted. Now, as long as lenders follow the rules for writing loans, the government guarantees FHA mortgages.

How a blurry photo can ruin a digital mortgage loan sale

In the meantime, using a hybrid process that automates as much as possible and handles other items on an exception basis generally offers time savings attractive to investors, lenders, consumers and Realtors, according to Jeff Bode, CEO of Mid America Mortgage.

While there are some legitimate challenges facing digital mortgages, a lot of times the concerns that stop companies from pursuing them are more about resistance to what is likely to be an uncomfortable change than actual roadblocks, he said.

"We got pushback all the way through," said Bode of his company's own digital mortgage initiatives . "You've got to make sure you're removing false barriers."

Real barriers to standardized digital mortgages that the industry continues to work on addressing include different jurisdictions' requirements for notarization, he noted, something the MBA and the American Land Title Association have been advocating for a model law to address.

Eventually, digital mortgage strategies could advance to the point where there won't be exception items and they can be standardized, said Shane Hartzler, director of e-mortgage strategy and operations at Fannie Mae.