Underwriting Default Risk
Qualifying the borrower and property 符合
条件的借款人和财财
– Borrower loan application 借款人的贷款申请
– Property appraisal 房地产评估
Default insurance 财财保财
Payment-to-income ratio
Loan-to-value ratio 财款与价比率
财财 财
8-2
Classification of Mortgage Loans
Conventional Mortgages 常规抵押贷款
– Usually no more than 80% loan to value ratio 通常不超过 80% 的
贷款价值比率
– No government guarantee or insurance 不政府担保或保险
– Conforming loans 符合贷款
Meet government sponsored enterprises (“GSE”) loan limit requirements 满足政府支持企业 (GSE) 贷款限制要求
– Nonconforming 不符合的
“Jumbo” loans“ 巨型”贷款
∙ Large dollar amount loans∙ 大金额的贷款
∙ Higher interest rate∙ 更高的利率
Subprime 次贷
ALTA (or “low-doc”)
8-3
Classification of Mortgage Loans
Insured Conventional Mortgages 传统抵押贷
款保险
– LTV usually > 80% ltv 通常 > 80%
– Private Mortgage Insurance 私人抵押财财
款保
财财
Insurer assumes default risk of the larger loan 保险公司
承担违约风险更大的贷款
Covers loan amount > 80% LTV 包括贷款金额 LTV >
80%
Generally no loan maximum but 95% is as far as most insurers will go 一般没有贷款最大但 95% 是大多数保险
公司而言
8-4
Classification of Mortgage Loans
FHA Insured Mortgages FHA 担保抵押贷款
– Lender completely insured against default loss
借款人完全保证违约损失
– Strict qualification procedures for borrower and property 严格的资格程序借款人和财产
– Lower borrower down payments 减少借款人首付
– Loan maximums 贷款最大值
– Section 203b most common program
8-5
Classification of Mortgage Loans
VA Guaranteed Mortgages VA 担保抵押贷款
– Qualified veterans 合格的退伍军人
– Guarantee may not exceed 25% of loan 保证不得超过
25% 的贷款
– Veteran pays a funding fee 老兵支付融资费用
– Certificate of reasonable value (“CRV”) 证书的合理值
(CRV)
– Loan entitlement 贷款的权利
– Unlike FHA program, the VA is providing a loan guarantee, not default insurance 不像联邦住房管理局计
划 ,VA 是提供贷款担保 , 而不是默认的保险
8-6
Underwriting Process
Borrower Income 借款人收入
– Verify employer, wages, expected continuity
核实雇主、工资、预期的连续性
– Verify other income 验证其他收入
Will it continue? 会继续吗 ?
Is it verifiable on prior tax returns? 可核查在之前退
税吗 ?
– Dual income 双收入
Stability of joint income 关节的稳定收入
8-7
Underwriting Process
Borrower Assets 借款人财 财
– Verify closing cost and down payment funds
验证关闭成本和支付资金
– Additional savings and investments 额外的储
蓄和投资
Class 6 - Debt & Shareholder Value Considerations Debt Considerations Loan size Secured vs. Unsecured: Secured loans are protected by an asset or collateral. Unsecured loans are credit cards, student loans, etc. Loan to value Guarantees and carve outs: A company taking a carve out is not selling a business unit outright, and may instead sell an equity stake Amortization period Sweep: Certain covenants to pay down any outstanding debt with free cash flow. Balloon payment Prepayment…
to solve the problem. They are trying to liberate form the problem of GFC by improving their risk management. This report will explain to the reader the mis-management before GFC and how the risk management has improved after GFC. The sub-prime mortgage crisis was the initial causes of the GFC in 2007 to 2008. Fundamental management and organizational failures has intensified the financial crisis. There are five types of risk management failures between the GFC. There are: inappropriate risk metrics…
[ HOUSEHOLD FINANCE/DEBT] [ ENKHJIN NYAMDORJ ] [ CALIFORNIA UNIVERSITY OF MANAGEMENT AND SCIENCES ] What is Personal Financing? Personal finance as described by Google define is “The application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.” Things such as savings…
For the past four years has been a challenge in the home mortgage industry. Delinquencies and foreclosures has been at record numbers are at levels we having seen since the great depression; which has had a major impact on our overall economy. In addition, the unemployment rate, higher energy cost, along with the high inventory of homes, and home sites for sale throughout the country has also greatly impacted the housing market. Because of how these variables impacted the economy, the government…
The Mortgage Housing Crisis The Smiths entered the front entranceway of a matured colonial home on Main St. They immediately began to envision themselves sitting by the fireplace on Christmas morning with their 2 children while they opened their gifts in their pajamas. The agent used every sales pitch in the book, but after finishing the tour, the Smiths minds were already made up; they were going to put in an offer. “We’ll take it,” John Smith said happily as he kissed his wife and they smiled…
Financial Corporation New Century Financial Corporation had been the United States’ second largest originator of subprime mortgage loans for over a decade until its filing of Chapter 11 bankruptcy protection on April 2, 2007. It announced on February 7, 2007 that it would have to restate its financial statements for the first three quarters of 2006 due to errors in accounting for its loan repurchase reserves. The restatements would significantly impact the state profits and earnings. Later on March 2,…
Attached is a sample of loan-level information (Exhibit 2). How would you expect an applicant’s debt-to-income ratio to relate to other loan characteristics, such as credit score? (Narrative) In analyzing an applicant’s debt-to-income ratio, I would take into account how much money the applicant makes monthly/yearly in order to determine the likelihood that they are able to pay off the loan in its entirety. For example, an applicant whose income greatly surpasses their debt to the point where they…
Wells Fargo and Company As a Global American company known for its diversified financial services, Wells Fargo and Company is the fourth largest bank in the United States when it comes to total assets and the second largest bank in deposits, home mortgage servicing, and debit cards. With the growing rate of the banking industry after the bailouts in 2009, it has been reported as of September 30, 2012 quarterly fact sheet that Wells Fargo and Company’s assets reached a total of $1.4 trillion. The…
Essent Guaranty Underwriting Test Multiple Choice Questions – Please select the correct answer. If a borrower’s paystub shows they are paid semi-monthly, how often does the borrower receive a paycheck? Once every two weeks. Once a week. Twice a month. Monthly. If the credit report does not have a stated payment listed for a revolving account, how should the payment be calculated? Multiply the account balance by 2%. Multiply the account balance by 5%. Divide the account balance by…