The tendency of borrowers with low credit scores to choose adjustable-rate mortgages over fixed-rate loans is more about economic considerations rather than a lack of financial sophistication, according to a study by Federal Reserve researchers. In the study, Fred Furlong, David Lang and Yelena Takhtamanova looked at factors that influenced lower-credit borrowers to select ARMs over fixed-rate mortgages during the housing boom in early 2000. In general, the research team observed ...
After years of operating in an environment with exceptionally low interest rates, federal regulators are warning lenders of risks as interest rates are expected to rise in 2014. Regulators are particularly concerned about lenders’ exposure to longer-term assets such as mortgages and agency mortgage-backed securities. “The recent increase in long-term interest rates underscores the need to understand and quantify bank vulnerability to rising interest rates,” the Office of the Comptroller of the Currency ...
Commercial banks and savings institutions coughed up $1.998 billion in mortgage repurchases and indemnifications during the third quarter of 2013, according to a new Inside Mortgage Trends analysis of call-report data. It was the lowest quarterly repurchase total for the industry since the third quarter of 2008, when the buyback storm was just beginning to gather force. The third quarter 2013 total also reflected a 25.2 percent drop from the second quarter. For the first nine months of 2013 ... [Includes one data chart]
Fannie Mae and Freddie Mac rushed to wrap up their legacy loan issues as 2013 wound to a close with multiple announcements of buyback settlements tied to loans originated prior to 2009. On Dec. 30, Fannie announced a $591 million agreement with Wells Fargo to resolve repurchase requests on certain loans originated prior to 2009.
“Transactions submitted with consumer-paid compensation more than 50 bps below [the] broker’s lender-paid tier will be rejected permanently and will not be eligible for re-submission,” Fifth Third Bank is warning.
Fannie Mae and Freddie Mac ended 2013 with several multi-million dollar settlements of buyback claims related to pre-crisis loans, completing a review of such loans mandated by their regulator. The Federal Housing Finance Agency directed Fannie and Freddie to complete their reviews of pre-conservatorship loan acquisitions and buyback demands by the end of 2013. Completing the rep-and-warrant reviews, the FHFA said was vital “to restore confidence in marketplace norms and practices and accelerate the resolution of outstanding claims.” Fannie, Freddie and their regulator, the Federal Housing Finance Agency, have been dogged...
Western Bancorp said it will lend to borrowers with credit scores as low as 620 and the loans are available to non-owner-occupied properties and first-time homebuyers.
However, a year-over-year look at the data shows a much poorer performance across the board, with overall grievances up 42 percent at Dec. 31, 2013, versus year-end 2012.
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