In an effort to boost lending, Wells Fargo, the nation’s largest mortgage lender, has assigned roughly 400 underwriters to originate mortgages that the bank will hold in-house. Up to 40 percent of these mortgages will fall outside tighter government lending guidelines that kick in this week.
The move will allow the bank to boost business while maintaining the quality of loans, according to Wells Fargo’s head of portfolio lending Brad Blackwell. Some of these loans have terms which prevent them for qualifying protection from the Consumer Financial Protection Bureau, Blackwell said.
Wells Fargo is looking to grab clients looking for unconventional loans – such as those with interest-only payments, according to Bloomberg News.
“As rates continue to rise and refinancing volume continues to contract, lenders are going to be looking for a way to keep their staffs busy,” Erin Lantz, director of mortgages for Zillow.com, told Bloomberg News.
The bureau’s new rules – part of the Dodd-Frank financial reform — come into effect January 10, and state that borrowers can’t have a debt-to-income ratio above 43 percent. The new requirement would make it harder for individuals such as entrepreneurs – whose incomes vary widely year-over-year – to qualify for a mortgage. [Bloomberg News] – Hiten Samtani