Underwriting

New investor appetite for mortgages over $1 million is motivating more nonbank lenders to offer super jumbo loans, often with weaker credit terms than traditional banks.

Wells Fargo estimates that in 400 instances, borrowers later went through foreclosure who were improperly denied or not offered a mortgage modification.

A Fannie Mae test to handle the private mortgage insurance process for lenders may raise concerns that it's going outside the scope of its secondary market mission. But the effort reflects its mandate to explore new credit-risk transfer alternatives, a company executive said.

Paycheck information gleaned from bank accounts is emerging as an alternative to verifying a mortgage applicant's income and employment with a 4506-T tax transcript request to the IRS.

Preferred Bank's experience with an apartment developer is a reminder of how important strict underwriting terms will be as loan demand increases, rates rise and lenders try to outdo each other.