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For example, wholesale lenders with a product mix of more than 90 percent conforming loans had a cost to originate of $2,226, versus a $5,208 cost to originate for lenders with a product mix of less than 25 percent conforming loans (see Figure 7).
The underlying pool consists of conforming loans of which 90.5% are full-documentation mortgages.
Subprime lending is "more hands-on" than originating conforming loans, he notes.
Originating a given volume of nonconforming loans will obviously entail more time and cost than an equivalent volume of conforming loans. So it is critical to perform the work more efficiently.
By loan count the portfolio is 54% agency conforming loans, 28% HUD loans, 14% subprime loans and 5% other.
Lipp sees reverse mortgages as niche products that help Allwest Mortgage avoid competing on price with larger firms for conventional conforming loans. The increased borrower "hand-holding and education" that reverse loans demand also "plays to our strengths," Lipp adds.
Today the vast majority of conforming loans are underwritten by these two systems.
Bluestone's non-conforming borrowers pay significantly higher interest rates than borrowers of conforming loans. The weighted-average interest rate is 7.2%.
With a high proportion of conventional conforming loans fitting this profile, we believe that conventional underwriting, processing and closing productivity has improved.
A small net percentage of banks tightened standards on conforming loans, while small handfuls of banks on net eased loan standards in the other categories.
While the new rule would apply only to conforming loans, which are those eligible for sale to Fannie and Freddie, it would spread quickly to the smaller market for nonconforming loans.
Department of Veterans Affairs (VA) given by the government agency Ginnie Mae, conforming loans (16) given by Fannie Mae and Freddie Mac (government-sponsored enterprises), and non-conforming loans such as jumbo loans or Alt-A loans.