Guy Cecala, publisher of Inside Mortgage Finance, says…

“Such fears are unfounded, noting Federal Reserve officials have complained that FHA loan standards have been too rigorous.”
“The non-banks are bringing a welcome change”

Bill Emerson, vice chairman of Quicken Loans, the largest non-bank lender, says…

“I don’t have any concerns about” a potential increase in delinquencies or defaults, Emerson said in an interview. “In the last three, four years, consumers have more access to credit….and all of a sudden it’s, ‘Here we go again.’


Concerns About Riskier Mortgages are Sprouting While Others See it as Welcome Change

Riskier borrowers are making up a growing share of new mortgages, pushing up delinquencies modestly and raising concerns about an eventual spike in defaults that could slow or derail the housing recovery.

The trend is centered around home loans guaranteed by the Federal Housing Administration that typically require down payments of just 3% to 5% and are often snapped up by first-time buyers. The FHA-backed loans are increasingly being offered by non-bank lenders with more lenient credit standards than banks.

The landscape is nothing like it was in the mid-2000s when subprime mortgages were approved without verification of buyers’ income or assets, setting off a housing bubble and then a crash. Still, for some analysts, the latest development is at least faintly reminiscent of the run-up to that crisis.

More here…