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The Importance of Credit Expansion for Homebuyers


Homebuyers are finding it much harder to obtain reachable rates to to restrictions on credit. First-time homebuyers are struggling the most and this struggle has many wondering whether credit expansion is the key.

"The mortgage industry is taking half, possibly even less than half, of the risk it was taking in 2001 and 2002, according to Laurie Goodman, center director at the Urban Institute, who was among panelists speaking at the Mortgage Bankers Association’s National Secondary Conference in New York," according to National Mortgage News.

For first-time homebuyers the struggle comes from having little to no credit score while having a spotless payment history for on time rent or car loan payments, according to the report.

The report also states that there are two main issues that get in the way of better accessing credit, in terms of the Federal Housing Administration.

"Under the False Claims Act, financial institutions are subject to pay triple in damages if any errors are found. And once an investigation is underway, any inaccuracy, no matter how small, becomes eligible for the False Claims Act," according to the NMN report.

"To solve some of these issues, the industry could implement the defect taxonomy, which will provide clarification on the underwriting errors that can expose lenders to triple damages."

This happens to be one of the solutions mentioned in the NMN report. There are additional patches and remedies that have been proposed but actually turning them to action is proving to be quite hard.

To learn more about credit expansion and what's necessary to help first-time homebuyers access greater lines of credit, click on the image above.

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