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Special Reports
In this section of BrokerUniverse we examine a subject of key importance
for mortgage originators every month, based on special reports that run in our sister publication, Origination News.
Construction Lending
Construction Lending: Getting Funds To Build
There has been a slowdown in new residential construction as interest rates have
risen and some consumers have run into difficulty obtaining a mortgage.
The subprime mortgage meltdown has a lot to do with what is happening in the construction business, said Joel Pate,
chief executive of the Vadium Group and an expert on construction-permanent funding. Mr. Pate writes a column on
the subject for the Broker Universe website.
The tighter lending market has taken about 25% to 35% of buyers out of being able to purchase a new home. Furthermore,
threats to the use of downpayment assistance programs have an impact on the market, he said. These borrowers start
at the bottom of the chain and if they are unable to purchase a home, potential move-up buyers are not able to
buy homes either.
Construction-permanent programs, Mr. Pate said, are for "where there is a defined need for people to borrow
money to build houses and have the credit required for the lender to originate and sell the loan." These lenders
gravitate towards borrowers with higher FICO scores.
There is an alternative, the Federal Housing Administration 203(k) program, but many lenders don't do it because
it is complicated.
In this Special Report, read how one bank's earnings have been impacted by the slowdown in the condominium market.
Also read about how the construction business is doing in the Carolinas.
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