-Manual underwriting vs. electronic
-Lower debt-to-income ratios than traditional conforming
-Only 30 and 15 year products
-No interest only
-Cannot payoff subordinate liens that were not purchased with money
-Pricing is higher than expected
Ohlbaum said he's steering more customers into loans offered by FHA. He said the rates are slightly better, loan-to-value ratios are higher and underwriting is completed electronically.
And at a time when consumers' credit scores are getting "beaten down harder than a piñata," Ohlbaum FHA mortgages don't have as high a threshold as their Fannie and Freddie counterparts.
So what's it going to take to make Fannie & Freddie more competitive?
Fred Glick, president and chief executive of Philadelphia's US Loans Mortgage has some ideas:
1. Permanently raising the limit so there's confidence for investors to buy the paper.
2. Open the market to more FHA originators by changing the requirements(HUD requires mortgage brokers to have a lot of net worth and have a lot of paperwork)
3. The National Association of Realtors is floating around a proposal to give people a tax credit for buying property.
"I think people need to have a grant program, they need cash in hand -- say, 10 percent -- would be a much better way to go and they'd have to stay in the property for a certain amount of time," said Glick.