Talk:Mortgage/Archives/2012

Split of "Mortgage" from "Mortgage loan"

Intro: most of the text moved here from mortgage to allow a split between the legal device and the mortgage loan, since they are distinct concept and different levels of detail required. Grateful assistance in cleaning up.--Gregalton 15:32, 16 December 2006 (UTC)

Clarification requested for "various net worth measures" in the section "Payment and debt ratios"

Will someone who works in brokerage or underwriting clarify the vague "various net worth measures" statement? I've gathered elsewhere on the web that there are often maximum limits on net worth, to make sure loans go only to people who actually need them. Is that correct? Also, are there minimum limits on net worth?

In other words, could a knowledgeable person (LO, AE, etc) answer this (for the US market, both conforming and nonconforming):

Are there maximum net worth limits, such as "< X (where X is a positive number)"? If so, what are typical values for X?

Are there minimum net worth limits, such as "> Y (where Y is a negative number)"? If so, what are typical values for Y?

I have wracked my brain for dozens of creative Google queries trying to find even a glimmer of this info. It seems like DTI is all anyone ever talks about. Lots of info on how to figure your net worth, but none on what limits may or may not be used in underwriting decisions. Does it really not matter? Or do people just tend not to think about it?

Thanks. — Lumbercutter 16:05, 22 April 2007 (UTC)

I can't answer this for US market with certainty (although I'm familiar with it), but I can add the following in general terms (for what it's worth):

• First use is often to look at downpayment source and funds to cover closing costs, etc. So minimum is in relation to the property and loan. Negative clearly would cause the underwriter's spider sense to tingle.
• "Various" measures can mean underwriters/lenders may include/exclude certain assets or liabilities for lending purposes (exclude cars, certain illiquid assets, locked-up retirement accounts, etc).
• Lenders may give better risk weighting (better pricing) to borrowers who have e.g. cash/assets buffer of three-six months or more.
• I'm not aware of any maximum net worth limits (anywhere), except perhaps to qualify for some government programs/tax issues/subsidies. Note that certain higher levels of net worth may hit automated credit scoring flags if they appear unusual.
• Apart from downpayment issues, use of 'minimum' net worth is not straightforward, and used more frequently for "hand-written" underwriting - much less so when credit-score/automated lending dominates. For example, someone doesn't qualify on an income basis (perhaps due to a highly variable income) may get consideration on the basis of assets. Used sometimes for non-standard products (negative interest) where income may be lumpy (and possibly driven by gains on the assets).
• For more automated lending (e.g. with automated underwriting), net worth may be used to check for anomalies - e.g. someone who declares high income but has no/negative assets, age/asset mixes that seem odd, etc. These anomalies may simply be used to require additional documentation, or they may lead to disqualification for a certain type of loan, or recommend for manual underwriting, or just add to pricing. Since the algorithms used to find these anomalies are pretty complex, it may be impossible to say that there is a minimum - there are simply increasing possibilities of rejection or pricing effects depending on other characteristics. If the algorithm is looking for fraud-related anomalies, it may be an adaptive algorithm, and the effect could change from month to month.--Gregalton 05:05, 24 April 2007 (UTC)

Thanks. That's a great answer because it explains more than I could find anywhere else on the web. Much obliged. — Lumbercutter 15:20, 24 April 2007 (UTC)

PPOV

"The UK mortgage market is one of the most innovative and competitive in the world." Consider attributing or removing. —Preceding unsigned comment added by 24.205.143.68 (talk) 03:54, 30 November 2007 (UTC)

History of Mortgage Loan

Has there been any consideration given to starting a new section on the history of the mortgage loan? Perhaps I'm just missing it, but the reason for asking is I've been searching for a detailed history of the mortgage loan and mortgage underwriting standards, and I can't find it -- either on Wikipedia or anywhere else on the Internet for that matter. In general I'm interested in both a history of the mortgage loan in the United States as well as the history in other countries. In particular, I'm interested in the history of rates, terms, down payment amounts, and underwriting standards since 1900. I'm also interested in major legal changes as well differences between different states over time. Internationally, I'm interested in things like which countries first developed mortgage markets, and how they changed over time. --Waltsos (talk) 01:48, 27 October 2008 (UTC)

The talkpage of user: Waltsos isn't established, hence some comments here:

Information on Danish mortgage:

• Mortgage loan, 8.2 Other nations, Danisk mortgage market
• Reports and articles on Danish mortgage, provided by The Association of Danish Mortgage Banks

Information on German and wider European mortgage:

• Mastroeni, O (2005) Pfandbrief-style products in Europe. Bank for International Settlements (BIS): BIS Papers No 5, 22 Jan 2008
• Guinnane TW, M Ghatak M (1999) The Economics of Lending with Joint Liability: Theory and Practice. Journal of Development Economics, Vol 60, 195-228, jfr. University of Copenhagen, Department of Economics, Discussion Papers, No 98-16: The Economics of Lending with Joint Liability: Theory and Practice, by Maitreesh Ghatak & Timothy W. Guinnane

Hedgehog41 (talk) 09:13, 27 October 2008 (UTC)

Like the original questioner, I was disappointed that history was not a bit more robust. When were mortgages generally available and used by the general public in the US for example? Early 20th century or earlier than that? I assume roughly the same timeframe in all western countries. Student7 (talk) 17:47, 17 May 2009 (UTC)

Proposed split of the UK section to Mortgages in the United Kingdom

I propose to split the UK section of this article to Mortgages in the United Kingdom and give it a fuller treatment. Would anyone object?—S Marshall ^Talk/_Cont 12:21, 27 March 2009 (UTC)

Done, as Mortgage industry of the United Kingdom. Rd232 ^talk 19:41, 19 March 2011 (UTC)

Continental Europe section

The below statement is absolutely incorrect, or it is extremely poorly worded. And there is no citation. Fannie Mae and Freddie Mac accounted (off the top of my head) for more than 50% of new mortgage originations in 2000. To say that in 2000, they "reached one per cent of the national population" is either wrong or grossly misleading.

"However, the diffusion of the concept differ: In 2000, the US institutions Fannie Mae and Freddie Mac together reached one per cent of the national population. Furthermore, 87 per cent of their purchased mortgages were granted to borrowers in metropolitan areas with higher income levels." —Preceding unsigned comment added by 67.170.87.38 (talk) 05:20, 14 October 2009 (UTC)

Proposed merge: Mortgage risk

Proposal: Merge content from Mortgage risk into Mortgage loan, appropriately, and redirect.

I've never heard the expression mortgage risk used to mean "the lender, borrower, or institution's risk," as the 18-year-old cited journal article suggests.

The other option I see is to rename it to Mortgage loan decisioning and merge some sections of the main article into this one. The risks to the consumer aren't part of decisioning, though, and wouldn't belong.

-- Pnm (talk) 03:30, 31 May 2010 (UTC)

This article deserves a place of its own given the proven high significance of mortgage risks as opposed to the mere fact that mortgages are loans. There are a number of topical articles about mortgages and search engines deliver the information based on the headline topic, so the accessibility and funciton of these sections will be undermined if they all are put under one blanket. This is the difference between an encyclopedia vs. a textbook which WikiPedia is not. Finance chap (talk) 13:34, 10 March 2011 (UTC)

Merged to mortgage underwriting, which seems to be the topic. Rd232 ^talk 19:40, 19 March 2011 (UTC)

Data sources?

What are the best sources of data on the breakdown of mortgages by type, LTV, region, etc? I recently read a publication which used Inside Mortgage Finance; other proprietary sources include "MortgageDataWeb from CBMI and the Mortgage Bankers Association, and Loan Performance. I would assume there are some decent government collections of data but I haven't exactly found them yet - plus the existence of proprietary databases suggests that the government sources aren't that great. The best source I've seen is the NY Fed's U.S. Credit Conditions. There's a working paper on this topic "The Dearth and Life of Subprime Mortgage Data: An Overview of Data Sources for Market Modeling" by Perry (2008). We also seem to have an orphan article on the topic at mortgage analytics. II | (t - c) 00:01, 30 October 2010 (UTC)

RM capital market material

The section dealing with Continental Europe is a huge section dealing with loan origination and capital market characteristics: Pfandbrief and general covered bond info and comparing and contrasting them with US asset-backed security usage. That's all fine and dandy, but leave all the details for the respective articles. (This section had more info than the main articles...) And it was drowning out any non-capital market material, of which I have found 4 sentences so far.

Specifically, I removed material that was not only a pretty deep analysis of covered bonds, but also the statement that Fannie Mae and Freddie Mac do not loan to very many people. Yes, that is covered in the main articles: "The corporation's purpose is to expand the secondary mortgage market..." Keyword: secondary. That 1% must be the loans they guarantee for veterans and single mothers that I have heard about (but aren't in the main articles BTW...)

I also removed a history of the Pfandbriefe that's as relevant as the history of mortgages and promissory notes, which is to say not very. Int21h (talk) 02:25, 15 December 2011 (UTC)

Defining little 'p'

In the paragraph starting with "An amortization schedule is typically worked out taking", the left hand side of the equation is 'p'. It would be nice to add this 'p' to the list of defined variables below the equation. daviddoria (talk) 01:01, 2 June 2012 (UTC)