The beauty of the mortgage industry is that no matter which way it shifts, there’s always some kind of opportunity.
Illustrating this point is the latest offering from Intellidyn, who announced today the release of prospect lists that allow marketers to target borrowers who currently hold negative amortization loans.
“Negative amortization loan-holders are a very tight base of borrowers organized into micro segments,” says Intellidyn CEO Peter Harvey. “Where borrowers with loan balances higher than their original loan amount are located in neighborhoods that are still appreciating, they have the LTV needed to refinance.”
“Certainly this is a small group. However, this is the level of micro-targeting that lenders need to be engaged in while under these market conditions,” added Harvey. “We anticipate that LTV’s will continue to increase, further tightening underwriting criteria.
Harvey noted that while there are about two million of these loans nationally, far fewer can actually be marketed to successfully due to current stricter underwriting guidelines.
And with margins tied to these loans typically hovering around three percent, many borrowers could be enjoying fully-indexed mortgage rates below six percent, making a refinance a less favorable decision.
Factor in the difficulty of getting a new loan approved and closed in today’s market and it actually might make sense for option arm borrowers to stay put.