Magazine article American Banker

Mortgages Simplified; A New Low-Down-Payment Option from Wells Fargo Is Less Complex for First-Timers

Magazine article American Banker

Mortgages Simplified; A New Low-Down-Payment Option from Wells Fargo Is Less Complex for First-Timers

Article excerpt

Byline: Austin Kilgore

Wells fargo has introduced a low-down-payment mortgage to serve as an alternative to Federal Housing Administration loans for low- to moderate-income borrowers and first-time homebuyers.

The "yourFirst Mortgage" was developed in partnership with Fannie Mae and is modeled after the low-down-payment offerings the government-sponsored enterprises introduced with limited success last year.

However, qualifying is much simpler - addressing a key disadvantage of such programs. "The problem in this space is that it's too complex for people to figure out," said Brad Blackwell, an executive vice president and portfolio business manager at Wells Fargo. "Loan officers and real estate agents walk away from it because it's too complex and consumers don't understand it."

Blackwell estimated that Wells, the nation's largest mortgage lender, originated only 200 of Fannie's HomeReady loans during the first quarter. The new program's volume should be a lot bigger.

"We're not interested in doing a handful of loans. We're interested in making a big impact on the first-time-homebuyer market by creating a better alternative for customers," he said.

Some of that expected increase in volume will come at the expense of Wells Fargo's FHA production at a time when many lenders are scaling back their involvement in the government mortgage insurance program. Lenders say they are concerned about being unfairly targeted by the Department of Justice for violations of the False Claims Act. …

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