While many industry experts say Fannie Mae and Freddie Mac should explore deeper mortgage insurance coverage as an alternative form of credit-risk sharing, some say the role of private MIs is overrated. The Urban Institute recently published a paper advocating a broadening of the credit-risk transfer programs at the two government-sponsored enterprises to include private MI coverage down to the 50 percent loan-to-value ratio. The think tank also encouraged Fannie and Freddie to create a more transparent lender recourse program and to diversify their highly successful debt note CRT programs to provide investors more offerings with risk segmented by LTV ratio and credit scores. Although the Mortgage Bankers Association and U.S. Mortgage Insurers, the trade group that represents private MIs, have stumped...
The new streamlined refinance programs for high loan-to-value loans to be rolled out by government-sponsored enterprises Fannie Mae and Freddie Mac next year are good news for market participants in their risk-sharing deals because they cut the risk of borrower default and the associated risk of investor loss, according to a recent report by analysts at Moody’s Investors Service. The programs are designed to provide much needed liquidity to borrowers with high LTV ratios who are current on their mortgage but can’t qualify for a more traditional refi. “The new programs are...
Homebuyers in two housing markets encompassing 13 states relied more on FHA and VA than other types financing, according to a new industry study of new single-family homes started in 2015. A study by the National Association of Home Builders found, among other things, that government-backed purchase lending and other forms of non-conventional mortgage financing remained elevated in 2015. For example, homebuyers in the South Atlantic and West South Central regions favored FHA and VA loans over other types of home-purchase financing. States in the South Atlantic region include Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia. Washington, DC, is also in this region. West South Central states are comprised of Arkansas, Louisiana, Oklahoma and Texas. Together, the two regions accounted for more than 26 percent and 21 percent of the ...
Originations of purchase-money mortgages jumped 44.3 percent from the first to the second quarter of 2016, without any sign of significant easing in underwriting standards. Mortgage lenders produced an estimated $267.0 billion of purchase loans during the second quarter, lifting year-to-date purchase originations to $452.0 billion, an 8.1 percent increase from the first half of last year. The refinance market still had...[Includes three data tables]
The near-zero default rate seen on mortgages originated in recent years combined with lenders’ extensive underwriting processes provide “clear evidence” that lenders should loosen underwriting standards, according to Laurie Goodman, director of the Urban Institute’s Housing Finance Policy Center. Wells Fargo originated more than 2.10 million conventional conforming mortgages between 2011 and the end of the first quarter of 2016. Only 4,082 of them became 60+ days past due in the first 24 months after origination, according to Moody’s Investors Service. Goodman said...
Home prices in the U.S. are continuing to rebound – in some cases, nearing their peak before the housing market’s collapse, and in other cases, exceeding their peak. The trending data are stoking anxiety among some market observers that the American housing and mortgage markets are either already in, or dangerously close to, bubble territory. For example, the latest Home Price Index from Black Knight Financial Services now stands at an average of $256,000, up 32.6 percent from the market’s bottom and just 1.1 percent away from a new national peak, based on June 2016 residential real estate transactions. That figure is up 5.3 percent from year-ago levels. Further, home prices in six of the nation’s 20 largest states in mortgage activity reached...
Industry observers are weighing in on the redesigned Uniform Residential Loan Application, an industry standard that has largely remained the same for the past 20 years, until now. The GSEs published the new form last week to give lenders ample time to get familiar with it. The updated form won’t officially be in use until Jan. 1, 2018. The URLA is for single-family loans submitted to Fannie Mae and Freddie Mae, as well as mortgages insured by the FHA, VA or U.S. Department of Agriculture’s Rural Housing Services. The redesigned form falls under the larger Federal Housing Finance Agency and GSE initiative to standardize single-family mortgage data in the U.S.
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