TheMReport — News and strategies for the evolving mortgage marketplace.
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TH E M R EP O RT | 11 loans with an adjustable or teaser rate. In many cases, if the lenders had done their homework, they would have found that when the rates adjusted, these borrow- ers were not qualified to handle the increased payments. Consumers weren't sophisticated enough to understand that going from a 2 percent interest rate in the teaser to a 4 percent interest rate later wasn't a 2 percent increase—it was 100 percent. Everything that could have gone wrong back then really went wrong. Today, companies like ours are manually underwriting the loans and taking an extensive look at a borrower's financial history. The loans are fully docu- mented, something subprime loans were not. They worked on stated income with- out any supporting documentation. In our case, we're generally looking at 24 months of bank statements or tax records, or at least a minimum of 12 months of bank statements. You can tell a lot about somebody's financial condition from looking at those documents. We put people through the Ability-to- Repay protocol imple- mented by the Bureau of Consumer Financial Protection (BCFP), which is something that didn't exist in the subprime era. Through these practices, we're offsetting, instead of lay- ering risk. The market is also supporting this difference in processing. M // Regarding the secondary market, what interest is there today in prime nonprime loans? SHARGA // The buy- ers on the secondary market are interested in nonprime products, but only if they're carefully underwritten and serviced, and only if there's reasonable assurance that the underlying collateral properties are val- ued at what's indicated in the loan documentation. The buyers of these types of loans are people who typically have a long-term financial horizon. They're looking at loans that will pay out over a period. We believe there's a market for people buying both whole loans or securitized pools. There is interest, again, if the loans are the kind of high-quality loans that have always interested the market. "Before the Great Recession, some of the lenders would layer risk. They would make a loan at low down payments to borrowers who had a bad FICO score, no money in the bank, and unstable income. Today, instead of layering risk, we're looking to offset it." The 10 Most Affordable Beach Towns in America For homebuyers looking at settling on the coast, these beach towns offer the best views at the cheapest prices. I f living on the coast is becoming a distant dream for buyers looking at homes in beach towns, then these 10 cities picked by Realtor.com give hope. To find beach towns that were big on amenities yet easy on the pocket, Realtor.com looked at home listings that mentioned the word "ocean" across the country's 900 largest housing market to find the towns with the lowest median list prices between April 2017 and May 2018. The most affordable beach town in the country, Realtor.com found, was Gulfport, Mississippi. With a median home list price of $184,100, home prices in this Gulf Coast city suffered after Hurricane Katrina's impact in 2005, as well as the financial crisis a few years later. Though they're on the upswing now, home prices in this community are still affordable, with a home right on the water starting around $300,000 and becoming cheaper further inland. For buyers seeking affordable options on the West Coast, Aberdeen, Washington, is the place to be. Median home list price here is $208,400, earn- ing the town the third spot on Realtor.com's top 10 list. However, single-family homes there can cost between $300,000 to $400,000. 1. Gulfport, Mississippi $184,100 2. Jacksonville, North Carolina $184,600 3. Aberdeen, Washington $208,400 4. Atlantic City, New Jersey $229,800 5. Myrtle Beach, South Carolina $234,800 6. Corpus Christi, Texas $237,600 7. Palm Bay, Florida $261,600 8. Virginia Beach, Virginia $273,200 9. Coos Bay, Oregon $274,200 10. Port St. Lucie, Florida $274,700 MDWELL BEACH TOWN MEDIAN HOME LIST PRICE