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Government wants to expand loan access, but many still underserved

Category | Financial Regulations
Government wants to expand loan access, but many still underserved

Rents are higher than ever and young people who previously eschewed homebuying in favor of renting a living space are demonstrating a new interest in the housing market. As these trends reshape homebuying trends in 2015, the federal government is enacting policies aimed at expanding access to credit. Despite these intentions, many near-miss borrowers are likely to remain underserved by these initiatives. The market for alternative loans, such as the Alt-QM™ options offered by Impac Mortgage Corp. Wholesale will remain strong as individuals who want to purchase a home seek out realistic solutions.

Rents drive homebuying desire

In the past, rental properties have offered a housing option for people who can’t afford the price of a mortgage, but the recent increase in renters has driven prices upward, and young people have started to notice the value homes offer. Without renting’s monthly price advantage, it becomes more difficult for people to justify paying into a living space that doesn’t build equity. Given that rents increased 3.6 percent during 2014, according to the Wall Street Journal, and is likely to increase further, young people are likely to make a shift toward homebuying.

“We are at the beginning of a multiyear period where more young people become homeowners,” said Jed Kolko, chief economist for Trulia in an interview with Bloomberg, “But I think it will happen more slowly than most people expect.”

The government tries to incite home purchases 

Some lawmakers would like that shift to happen quickly. The executive branch has pushed for looser lending requirements to expand the number of people who are eligible to receive loans, and FHA-backed lenders Fannie Mae and Freddie Mac began offering low-down payment options early in 2015, according to The Wall Street Journal.

“People are shut out by strict requirements.”

While the presence of loans with low 3.5 percent down payments does open the doors to some people who simply lacked the cash to pursue other home loan options, it does not do much to provide credit to people who are shut out by the other strict requirements on many loans.

The current rules for QM loans put a high priority on a borrower’s income documentation, which many otherwise qualified individuals simply don’t have. Self-employed borrowers or foreign nationals living in the U.S. may have the assets necessary to procure a mortgage, but might lack tax information. For these borrowers, alternative loans from Impac Mortgage Corp. Wholesale provide an attainable route to homeownership.

For more information about Impac Mortgage Corp. Wholesale’s loan programs, contact us directly or an Account Executive at 877-310-0970.

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