Second Liens Grow
Again as Other Mortgage Lending Dwindles
Since home loans rates increased from record lows in 2013, lenders have found it more difficult to originate first lien loans. However, Phil Rizzuto, senior vice president of home lending at the $129 billion-asset Citizens Financial Group in Providence, R.I., says second lien loans have become more attractive to homeowners as home values rise. MortgageStats.com reports that $4.6 billion of second lien mortgages were written by the top 10 funders of these loans in the first quarter, up 44 percent from the same period in 2013. While second liens were difficult to work out when many types of home loans originated between 2005 and 2007 went into default, Rizzuto says underwriting criteria is stricter now. These days, new second liens typically are not securitized, with Rizzuto noting that Citizens holds most of its new second liens in portfolio. Moreover, the ability to repay rule does not apply to home equity lines of credit, only closed-end home equity loans. Becky Walzak, executive vice president of Mortgage TrueView in Media, Pa., says this gives second liens some advantages over low-down-payment first liens.
From "Second Liens Grow Again as Other Mortgage Lending Dwindles"
American Banker (08/01/14) Sinnock, Bonnie
Since home loans rates increased from record lows in 2013, lenders have found it more difficult to originate first lien loans. However, Phil Rizzuto, senior vice president of home lending at the $129 billion-asset Citizens Financial Group in Providence, R.I., says second lien loans have become more attractive to homeowners as home values rise. MortgageStats.com reports that $4.6 billion of second lien mortgages were written by the top 10 funders of these loans in the first quarter, up 44 percent from the same period in 2013. While second liens were difficult to work out when many types of home loans originated between 2005 and 2007 went into default, Rizzuto says underwriting criteria is stricter now. These days, new second liens typically are not securitized, with Rizzuto noting that Citizens holds most of its new second liens in portfolio. Moreover, the ability to repay rule does not apply to home equity lines of credit, only closed-end home equity loans. Becky Walzak, executive vice president of Mortgage TrueView in Media, Pa., says this gives second liens some advantages over low-down-payment first liens.
From "Second Liens Grow Again as Other Mortgage Lending Dwindles"
American Banker (08/01/14) Sinnock, Bonnie
No comments:
Post a Comment