“It’s one thing to give someone the flexibility associated with an interest-only loan,” Date said. “But it’s another thing to act as if the payment is never going to get higher.”

Several community banks also offer interest-only mortgages outside the jumbo market, said David Lykken, a partner at consultant Mortgage Banking Solutions. And EverBank Financial Corp. offers home-equity lines of credit of as little as $250,000 for property purchases that require just interest-only payments during periods in which more funds can be drawn, said Kipin Alexander, a spokeswoman for the lender.

Financial Counseling

Aggressive sales of “nontraditional loans that were unsuitable” devastated borrowers and helped fuel the housing slump, said Kevin Stein, an associate director at the California Reinvestment Coalition. That’s one reason why home buyers need access to nonprofit counseling, he said.

“It may be that there are some borrowers for whom these products make sense,” Stein said in an e-mail. “But there are many for whom it does not.”

United, which expects to originate about $14 billion of mortgages this year, sees interest-only loans helping borrowers who would rather invest or save some of the money that they could be putting toward their loans, Ishbia said.

Appropriate Loans

His firm has lined up two companies to buy the loans that it makes through its network of 5,000 brokers, including one “Wall Street” firm, he said. Ishbia isn’t interested in creating other types of loans that buyers are starting to seek.

Unlike some rivals, it won’t be offering loans to borrowers who are just a day out of foreclosures, he said. While such mortgages can require down payments of 30 percent or more, protecting investors, they aren’t necessarily appropriate, he said.

“That’s old school thinking,” Ishbia said. “If people put profit ahead of what’s best for borrowers, they’re going to end up in trouble.”




/
 

First « 1 2 » Next