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Lack of Credit Availability, Low Inventory Challenging Housing Market

Kroll Bond Ratings Agency Housing MarketTwo challenges facing the U.S. housing market is currently facing are a dearth of credit creation and a lack of available inventory, according to a report released Wednesday by the Kroll Bond Ratings Agency (KBRA) that is scheduled to be presented Thursday by KBRA Senior Managing Director and Head of Research Christopher Whalen at the 2nd Annual Real Estate Symposium in Salt Lake City, Utah.

Whalen said the dearth of available credit for housing is a function of Dodd-Frank Act, which was created in part to protect consumers from predatory and other harmful lending and financial practices by businesses, and the oppressive U.S. regulatory environment, which discourages banks and other lenders from expanding credit for both consumers and businesses. Whalen asserts that the intention of Dodd-Frank was to prevent the bottom third of U.S. households from getting a mortgage – a goal that Whalen says has been achieved.

Single-family home prices in most metro areas are beginning to rebound from a weak showing last summer, based on data released by Weiss Residential Research, according to Whalen. But while Whalen said low mortgage interest rates are causing home prices to rise and encouraging sales of mortgages into the agency, the low interest rates have not translated into an increase in mortgage lending – especially purchase mortgages.

Whalen reported in the presentation that loan originations for mortgages were at a 12-year low with no recovery in sight. Meanwhile, bank revenues from mortgage sales, securitization, and servicing declined by 35 percent year-over-year down to $9.1 billion. The good news for banks is that non-current real estate loans have declined for 19 straight quarters, below 2 percent for all loans.

Thursday's symposium in Salt Lake is sponsored by Green River Capital, a wholly owned subsidiary of Clayton Holdings, LLC.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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