"The report identified borrower eligibility as one of the industry's fastest-growing quality concerns. Borrower and mortgage eligibility defects rose 291.58% year over year in 2025, while credit defects increased 166.13%. ACES said the shift reflected borrowers stretching to qualify in an affordability-constrained housing market, with lenders increasingly encountering loans near program eligibility thresholds. Refinance lending became a larger share of the market during the year as mortgage rates eased."
Lenders finished 2025 with a strong fourth quarter, showing a meaningful drop in the critical defect rate while the full-year average stayed essentially flat versus 2024. The improvement came from broad declines across underwriting categories, including income and employment, credit, and insurance defects. Legal, regulatory, and compliance issues increased to 24.66% of all defects, reclaiming the top defect category for the second time since late 2024. The increase was linked to operational pressures from returning refinance activity, including disclosure timing problems, documentation gaps, and compliance checks tied to qualified mortgage and anti-predatory lending rules. Borrower eligibility defects rose 291.58% year over year in 2025, reflecting loans near program eligibility thresholds as affordability constraints intensified and refinance share expanded.
#mortgage-quality-control #borrower-eligibility #refinance-lending #legal-and-regulatory-compliance #underwriting-defects
Read at www.housingwire.com
Unable to calculate read time
Collection
[
|
...
]