Tag Archives: Credit Risk

Despite recent gains, which some of us believe are more of a mirage than an oasis, the economy still isn't creating enough good-paying full-time jobs to drive a full recovery in the housing market. At the same time, stricter lending requirements--and a lending environment likely to get more challenging before it gets easier--are the other major headwinds that could slow down housing.

Many economists and market observers have suggested the market is poised for continued growth as the recovery enters its third year, and there are positive elements in play that provide some reasons for optimism. Recent loan vintages continue to perform at levels better than historical norms, which has allowed the industry to work through its backlog of distressed assets; foreclosure activity is declining; and housing starts have begun to rise.

Mortgage industry commentators may argue (and they certainly have) about the Consumer Financial Protection Bureau's (CFPB) performance over the last year, but one thing is certain: The bureau knows how to command headlines. Early this year, CFPB finally issued its long awaited Qualified Mortgage (QM) guidelines along with a slew of other finance regulations. With the future of housing finance on the line, it's no wonder readers of DSNews.com couldn't tear themselves away from the news.

The Federal Housing Finance Agency (FHFA) says it wants input on a plan to lower the ceiling for loans eligible for purchase by Fannie Mae and Freddie Mac. Under FHFA's proposed plan, the $417,000 maximum limit for single-family homes in most areas around the country would be lowered to $400,000, a reduction of about 4 percent. Areas with higher limits would see a similar cut, with the $625,500 maximum dropping to $600,000.

About 6.4 million homes remain underwater after nearly 800,000 homes returned to a state of positive equity during the third quarter, according to the latest data from CoreLogic. The real estate analytics and services provider says the increase in equity brought the share of underwater properties down to about 13 percent nationally, compared to 14.7 percent in the second quarter.

HUD has issued a newly revised definition for Qualified Mortgage (QM) which will affect all Federal Housing Administration (FHA) loans moving forward. The new rule goes into effect January 10, 2014, and will apply to mortgages that are insured, guaranteed, or administered through HUD. The agency's version of QM builds on the existing QM rule finalized by the Consumer Financial Protection Bureau earlier this year.

The Federal Housing Administration (FHA) issued new guidelines for manually underwritten loan applications that should improve a lender's ability to evaluate borrowers' risk and reduce credit requirement ""overlays"" that exceed FHA's lending standards. The agency says the move will help restore its depleted Mutual Mortgage Insurance Fund from which it pays claims without forcing lenders to over-tighten credit standards.

A total of 38,908 insurance certificates for borrowers seeking to buy or refinance a home were issued by members of Mortgage Insurance Companies of America (MICA) in October. That number sits lower than most other months of 2013 and is nearly 4,000 less than last October. At the same time, dollar volume on insurance written throughout the month was the lowest since May 2012.

The percentage of homeowners who owe more on their mortgages than their homes are worth has declined to less than 12 percent as of the third quarter of this year, according to Lender Processing Services' (LPS) Mortgage Monitor report. While the increasing number of homeowners rising above water is good news for the market, LPS detects some tumultuous seas ahead as a cloud of problem home equity loans forms on the horizon.

Perhaps you've known someone who raised money for a documentary or civic project by making an appeal through crowdfunding on the Internet. Now, the concept of pooled resources is being used as an investment vehicle offering equity in homeownership to investors and loan assistance to selected prospective homeowners.