FDIC Report Highlights Suggestions for Expanding Mortgage Loans to Low- and Moderate-Income Households
Source: Federal Deposit Insurance Corporation
The FDIC today issued a report on ways mortgage lenders can responsibly and profitably expand the availability of home loans to low- and moderate-income (LMI) borrowers and still make a profit. The report — a summary of best practices discussed by participants at an FDIC forum in July on problems in the mortgage market — said that basic, traditionally underwritten, 30-year fixed-rate mortgages are the most suitable home loan for most LMI borrowers.
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The FDIC report also said that lenders can profitably make fixed-rate mortgages and other loan products more widely available to the LMI market by responsibly adding flexible and innovative features, such as extending repayment schedules, expanding alternative underwriting processes for consumers with limited credit history, and creating innovative insurance products to address temporary income disruptions.Other best practices discussed in the report involve improving incentives and compensation throughout the mortgage process, increasing transparency and due diligence by providing more information about individual loan terms and pools of loans, and fostering public and private partnerships to facilitate LMI mortgage lending.
The report on best practices was issued through an FDIC Financial Institution Letter distributed to insured institutions but is also intended for the benefit of other mortgage professionals. The FDIC issued the findings for informational purposes only and not as supervisory guidance to FDIC-supervised banks.
+ Best Practices from the FDIC’S Forum on Mortgage Lending for Low- and Moderate-Income Households
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on Friday, September 5th, 2008 at 10:18 am and is filed under Business and economics, Consumer issues, Government and politics, Housing and real estate.
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