Trends in the Mortgage Market

Starting in 2010, lending standards became tight due to the financial crisis and plummeting housing values. New regulations require

1. Lenders to retain at least 5% of the loans that are securitized, except for those fully documented fixed-rate loans that are considered “safe”
2. Stricter limits on prepayment penalties or fees that lenders charge when a loan is paid off early.
3. Borrowers to show they can pay the loan and lenders will have to require much more documentation. Self employed borrowers may have more problems getting a loan
4. Creation of management companies to facilitate the ordering of appraisals by lenders, which also act as insulators from lender pressure in arriving at market value.

These changes were the result of loose regulation during the bubble years of real estate. The result was many fraudulent mortgages.