Down Payment Resource Analysis Finds 33% of Denied Mortgage Applications Are Denied for Reasons That Can Be Addressed With Home Buying Assistance | national news
Analysis Highlights Huge Opportunity to Improve Homeownership Affordability Through Homebuyer Assistance Programs
ATLANTA, Ga., June 7, 2022 (SEND2PRESS NEWSWIRE) — Down Payment Resource (DPR), the national database of U.S. homebuyer relief programs, today announced the results of an analysis showing that a substantial portion of mortgage applications are both declined for reasons that can be resolved with homebuyer assistance and eligible for homebuyer assistance programs.
The results were obtained by analyzing HMDA data for tens of thousands of declined purchase mortgage applications representing a volume of $3.7 billion provided by mortgage lenders. Loan applications denied due to insufficient debt-to-equity ratios or disqualifying debt-to-equity ratios (DTIs) were classified as potentially recoverable with home purchase assistance. Eligibility for homebuyer assistance for this application group was determined by running loan application data – including location, home price, loan amount, income and ownership history – via DOWN PAYMENT RESOURCE® database.
Matching assistance programs were then applied to each loan to determine how applying homebuyer assistance to eligible declined loan cases would have impacted loan-to-value (LTV) ratios.
The main conclusions are as follows:
* A large proportion of the refused loan files were eligible for home ownership assistance. 33% of all declined purchase mortgage applications were declined due to insufficient closing cash ratio or disqualifying DTI ratios and also eligible for home purchase assistance at the time of the declination. The large share of loans potentially recoverable with home purchase assistance highlights a significant, low-cost opportunity for lenders to increase purchase volume.
*Declined loan applications were generally eligible for multiple programs. On average, declined loan applications were eligible for 10 homebuyer assistance programs, indicating that there are often multiple options available to homebuyers financing with homebuyer assistance. buying a house.
* Many declined loans could have been recovered with homebuyer assistance. Applying home purchase assistance to eligible refused loan applications would have reduced the LTV by 5.85% on average, making most loan applications recoverable. Lowering the LTV can open the door to better and more affordable first mortgage scenarios, including conventional (rather than FHA) financing, lower mortgage insurance costs, and better interest rates.
“In light of National Homeownership Month and the state of the housing market, it’s important for the mortgage industry to consider ways to improve financing outcomes for homebuyers,” said DPR CEO Rob Chrane. “Our analysis definitely shows that assisted homeownership programs are the most promising path to homeownership for a significant portion of the buyer population. Yet home ownership assistance programs are rarely offered as an option. I hope this information helps lenders better serve their communities by showing that qualified homebuyers in need of down payment assistance is not a niche market, but a major market that continues to grow. .
About Deposit Resource:
Down Payment Resource (DPR) is a national database of down payment assistance and affordable loan programs. The company tracks funding status, eligibility rules, benefits, and more for approximately 2,200 programs in 11 categories. Its award-winning technology is helping the housing industry connect more buyers to the down payment help they need. DPR has been recognized by Inman News as “the most innovative new technology” and the HousingWire Tech100™. DPR is licensed to multiple listing services, realtor associations, lenders and housing counselors across the country. DPR’s subscription-based service, Down Payment Connect, helps agents and loan officers match buyers with available programs. For more information, please visit https://downpaymentresource.com/ and on Twitter at @DwnPmtResource.
NEWS SOURCE: Deposit Resource
This press release has been issued on behalf of the source of the information (Down Payment Resource) which is solely responsible for its accuracy, by Send2Press® Newswire. The information is believed to be accurate but not guaranteed. Story ID: 82387 APDF-R8.6
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