The nation’s major banks are continuing to walk away from FHA-backed mortgages, according to the Urban Institute’s Housing Finance Policy Center February Chartbook.
And not only are nonbanks stepping in to take over the space, overall, they are continuing to ease access to credit.
“Bank and nonbank FICO scores reveal that nonbanks brought the Agency median FICO down four points to 726 between November 2018 and January 2019,” the Urban Institute said in an email.
The average agency FICO score for banks is high at 745, compared to 713 at nonbank lending institutions. Both show FICO requirements on the way down, but it's more pronounced at the nonbanks. Why?
Nonbanks are also more accommodating for increasing debt-to-income ratios, even as mortgage rates overall inch upward, driving up monthly mortgage payments for borrowers.
“The median LTV for nonbank and bank originations are comparable, while the median DTIs for nonbank loans are higher,” the report states.
