Originally Posted by Piobaire
Do you think we're going to see a return to "real" underwriting practices, like 20% down and 36/28 (I think that's the %) ratios?
Qualifying ratios are definitely back in vogue. I don't think they'll be precisely defined, but I don't think we'll see 50+ backend ratios like we did in the fury of ninja loans.
As to downpayment: no, not 20%, although we are seeing risk-based pricing, in rates and up-front fees depending upon downpayment. In the old days, about the only pricing difference was in the mortgage insurance rate.
I closed a deal a couple weeks ago for a "golden" buyer: they went 80-10-10 and got nicked on the 80 with a bunch of up-front fees because of the existence of the 10 second. That would never have happened three years ago: the pricing would've been the same as if they'd put down 20%.
Things are just going to be different; it isn't necessarily a bad different. I think most people in mortgage industry learned their lesson. Or they are hiding out while they figure out a way to game the system again.