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Tag Archives: Credit Risk

HUD Defines Two Types of Qualified Mortgages

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.

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FHA Updates Underwriting Guidelines for Evaluating Borrower Risk

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.

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Business Declines for Private Mortgage Insurers

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.

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As Borrowers Emerge from Underwater, Cloud of Problem HELOCs Rises

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.

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Capital Markets Veteran Outlines New Method of Home Financing

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.

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Despite Rising Prices, Investors Expected to Remain Most Active Buyers

While rising home prices have lifted many underwater homeowners to positions of positive equity, the real estate information and analytics provider DataQuick warns tight credit will still preclude many traditional buyers from the market. Instead, investors will continue to carry an outsized portion of the purchase market for the foreseeable future, according to DataQuick.

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Fed Cites Improvements in Real Estate in Half of Districts

""Modest to moderate"" economic growth continues to be the theme at the Federal Reserve, which this week released its Beige Book, tracking expansion across the 12 Fed districts from October through mid-November. The central bank reported improvements in residential real estate activity in the Boston, Philadelphia, Chicago, St. Louis, Minneapolis, and San Francisco regions, with single-family home sales softening in most of the remaining districts.

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Is Tighter Credit for the Better?

It's no secret underwriting standards have tightened in recent years, and while many decry the heightened standards for making homeownership less accessible to some Americans, an economist with CoreLogic points out in a report released Wednesday that heightened standards are, without question, impacting delinquencies for the better, with 2013 vintage loans carrying a serious delinquency rate of just six basis points.

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GSE Purchases Insurance to Encourage Private Market Participation

In an effort to mitigate potential losses incurred by a questionable pool of single-family loans, Freddie Mac announced Tuesday that it has obtained an insurance policy underwritten by Arch Reinsurance Ltd. The policy will cover up to $77.4 million of credit losses for a portion of the credit risk associated with a pool of single-family loans funded in the third quarter of 2012. The move is in line with the GSE's goal of sharing credit risk with the private market.

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GSEs to Return Another $39B to Taxpayers

Both Fannie Mae and Freddie Mac continue to see strong profits as the housing market improves. With the release of their third-quarter results the GSEs announced they will be making substantial payments to the U.S. Treasury in December--$8.6 billion from Fannie Mae and $30.4 billion from Freddie Mac. Together, the two companies will have paid back about $185 billion to taxpayers as of December, nearly equaling the $188 billion in bailout money provided to the two mortgage financiers.

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