Washington Mutual has made a series of changes to its guidelines for both retail and wholesale mortgage loan production.
Probably most significant is the move to make broker originated jumbo option-arms Full doc only, which should eliminate some of the associated problems.
An accompanying e-mail said the following:
“In addition, the complexity of an illiquid market for jumbo loans requires all of us to take a fresh look at the kind of production we choose to originate.”
“We are taking some significant steps to realign our production volume to drive the highest quality possible in our portfolio by changing or eliminating some aspects of our lending policy.”
Below are the related guideline changes:
For retail lending:
1. Retail Broker has been eliminated.
2. Overages for retail home loans eliminated
3. Jumbo Option Arm loans & All Multi-Pay products will only be available as purchase transactions with a minimum Fico score of 680, no more refinances allowed.
For wholesale lending:
1. Jumbo Option Arm loans (including their flex products) and their Multi-Pay products will only be available as full doc, purchase transactions with a minimum Fico score of 680
2. Alt-A products have been eliminated.
Additionally, lot loans have been eliminated from the product mix, mainly for their lengthy processing time and limited demand.
Starting Monday, Countrywide will qualify borrowers at the fully indexed rate, as opposed to the interest-only payment they used to allow, making it that much more difficult to qualify for a loan.
Also Monday, IndyMac is scrapping its stated income documentation option for passive income borrowers who rely upon retirement and rental income to qualify.
These types of borrowers will now need to go full doc.
I’ve also been told that MortgageIT has halted its Fannie Mae SISA loan programs.
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