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Agency purchase loans became even riskier overall in October, driven by an increasing shift in originations from banks to nonbanks, according to data released by American Enterprise Institute’s International Center on Housing Risk on Friday. The composite National Mortgage Risk Index for agency purchase loans rose by 0 point 76 percentage points year-over-year in October up to 12 point 14 percent and has now increased year-over-year every month since January 2014.
The increase in agency loan riskiness has been largely driven by the migration in originations from banks to nonbanks, since nonbank lending is substantially riskier than lending from large banks. About 70 percent of first-time buyers in October had down payments of 5 percent or less, and more than one-quarter had debt-to-income ratios higher than the Qualified Mortgage limit of 43 percent, suggesting that credit access is not tight for first-time buyers.
The Federal Reserve has announced that borrowers who do not claim the funds owed to them from the Independent Foreclosure Review by a certain date will forfeit that money and it will be redistributed to eligible borrowers who have already cashed or deposited IFR relief checks. The deadline is December 31, 2015, for borrowers of the servicers regulated by the Fed who have not cashed or deposited their original checks to request a replacement check. The deadline or cashing or depositing these checks is March 31, 2016. Unclaimed funds will be distributed to borrowers who have already cashed or deposited their original checks.
