A lender panel recently told REALTORS® they are seeing some loosening in underwriting and easing of jumbo loans.

Asked about whether there is a preference between fixed loans and ARMs (adjustable-rate mortgages), Connie Chronis (Diversified Capital) said it depends on the individual’s circumstances and whether the borrower is going to keep the property as a personal residence or a rental. She did note that ARMs are becoming more attractive these days and some buyers continue to look at them as a good strategy “to get in,” save some money and refinance down the road. She said move up buyers tend to lean more on a 30-year fixed rate conforming loan.

Asked about appraisal management companies, Alan Russell (Princeton Capital) said in the past there were numerous complaints of lenders using out of town appraisers who were unfamiliar with property values in the area. Russell said lenders are now more inclined to use experienced appraisers from within 10- to 15-mile radius of an area.

John Woodfin (MetLife) reminded REALTORS® the high conforming loan limit, which was extended to $729,750 in high-cost areas, will end on September 30, so there could be a sense of urgency among some buyers. “It will certainly impact the marketplace,” Woodfin said.

The panelists also noted it is easier to get a loan today than it was 12 months ago, when lenders reverted to tighter underwriting and guidelines. Maria Anderson (Bank of America) said she has seen a loosening of underwriting in the past 12 months. She attributes this to more educated and knowledgeable loan officers. 

The key to a smooth loan process is working with a good loan officer. “The ultimate loan officer is detail-oriented and thinks like an underwriter,” Anderson said.

The panelists stressed the need to work together as a team. As loans perform well, they expect underwriting standards will relax a little more.