Based on a recent article in The Wall Street Journal, reportedly over $33 billion worth of unconventional mortgages were written by lenders in the first three quarters of 2018. This is up over 23% for the same timeframe in 2017.
Because these unconventional loans don’t qualify for Fannie Mae or Freddie Mac underwriting, lenders will charge the borrower a premium rate. These non-traditional loans, which may be over-sized in relation to a borrower’s income/debt ratio, are structured as interest-only or may have a term longer than 30 years.
I reached out to Maria Pienkos, Mortgage Loan Originator, NMLS #659684, with Patriot Lending Services Inc., located in Spring Hill FL, to inquire if Patriot Lending Services was also offering this type of loan. Maria indicated that they had not done any yet, however, Patriot Lending does have access to a few lenders that do offer non-traditional mortgages. Furthermore, Maria indicated that the guidelines for these types of mortgages are more restrictive than the old “no doc” loans and that larger down payments are typically required.
Consumer advocates are concerned that an increase in these non-traditional mortgages could be risky for the housing market and could spark a downturn, thereby increasing the possibility of short sales and/or foreclosures.
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