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Tag Archives: Credit Risk

Delinquency Study Indicates Housing Is Nearing Pre-Crisis Norms

Delinquency and foreclosure data reveals the housing market is heading back to pre-crisis norms, according to the Mortgage Bankers Association's latest National Delinquency Survey. The percentage of home loans in delinquency or foreclosure was 9.75 percent as of the third quarter, the lowest level in about five years, according to the trade group's report. Likewise, foreclosure starts, at just 0.6 percent, are approaching pre-crisis levels.

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Freddie Mac Prices Second STACR Risk-Sharing Deal

Freddie Mac has priced a $630 million offering of Structured Agency Credit Risk (STACR) debt notes, marking the second STACR offering in which private sources--not taxpayers--take on the credit risk. According to a statement from the GSE, about 50 broadly-diversified investors participated in the offering for the debt notes, which are scheduled to settle November 12.

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Borrowers Deemed Less Healthy in Q3 as Prices and LTVs Rise

Borrowers' financial health deteriorated in the third quarter after seeing marked improvement in the previous three-month period, according to recent findings released by the online exchange LendingTree. The company's measurement of borrower health is based on average loan-to-value (LTV) ratios and average credit scores, and with rising home prices, potential borrowers faced more financial pressure.

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Economist Decries New QRM Proposal

While many in the industry laud the recent changes the Consumer Financial Protection Bureau (CFPB) made to the proposed Qualified Residential Mortgage (QRM) rule, one economist says the new proposed rule sets the stage for another housing crisis.

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Equifax Solution Looks at Past Credit Behavior to Predict Future Default

Equifax announced the availability of Equifax Dimensions, a new product created to deliver a more in-depth picture of past credit behavior to predict future trends. Users of the new solution can see up to two years' worth of detailed consumer credit activity, allowing them to identify consumer patterns such as a borrower's financial ""breaking point"" that will lead to default and which consumers are most likely to open new accounts.

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Beige Book Again Sees Modest-to-Moderate Growth

Continuing to shrug off sequester cutbacks, but feeling the effects of adverse weather, the nation's economy ""continued to expand at a modest to moderate pace"" from early July through late August, the Federal Reserve reported Wednesday in its Beige Book assessment. Echoing--or perhaps anticipating--governors' concerns at the upcoming policy meeting, the Beige Book said ""hiring held steady or increased modestly"" while ""upward price pressures remained subdued, and prices increased slightly.""

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Prospective Borrowers Improving Their Chances of Getting Qualified

Tight lending standards may be keeping some prospective borrowers out of the market, but according to LendingTree, consumers overall are increasing their likelihood of getting approved for a home loan with higher credit scores and lower loan-to-value (LTV) ratios. Over the last year, average credit scores for prospective borrowers rose by more than 10 points, LendingTree revealed in a Q2 borrower health report. At the same time, average LTVs improved, falling 1.6 percent. According to the report, prospective borrowers in Washington D.C. have the strongest profile when it comes to qualifying for a home loan.

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Do Natural Disasters Lead to Loan Default?

Homeowners whose homes are located in designated flood zones are required to purchase flood insurance, and others in areas where natural disasters are common may also be required to insure against those risks. However, CoreLogic economists recently asked if that is enough to guard against these risks. In particular, they asked, are homeowners more likely to default when natural disaster strikes? The answer, in short, is ""yes.""

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Commentary: Solving the Wrong Problem

President Obama is trying to solve the wrong problem by calling, as he did in his speech in Phoenix, for the end of Fannie Mae and Freddie Mac as we know it. To be sure, Fannie and Freddie were not the hallmarks of responsibility in the mortgage meltdown, but have gotten a bad rap. For all their housing expertise, they missed all the signals of the housing bubble (but then again so did Federal Reserve chairman Alan Greenspan and his successor Ben S. Bernanke who dismissed it when the first signs of the meltdown emerged). Instead of suggesting replacing Fannie and Freddie to restore the nation's housing markets, the president should be proposing to return them to their original charters.

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