The secondary mortgage market, which has grown increasingly more powerful in recent years -- driving many decisions made by originators and servicers -- now broadly acknowledges a need for more due diligence on its part. At least some motivation is fear that if the sector does not self-regulate, lawmakers and regulators will force them to do so. Regardless of what drives the stricter vetting of loans, it will reduce the availability of credit for home purchases, refinancing and equity access -- especially at the outer margins of creditworthiness, where lending has grown extensively the past few years. For those higher-risk borrowers, "there are severe liquidity restraints affecting underwriting criteria," says Damien Weldon, vice-president of collateral and prepayment analytics at LoanPerformance in San Francisco. But, Weldon says, "There is no credit crisis in mortgages for the average borrower." Indeed, a research report out this week from the University of Pennsylvania's Wharton S...
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