Fannie Mae and Freddie Mac in the second half of last year saw a rapid growth of loans with high debt-to-income ratios, thanks in part to the so-called GSE patch. The government-sponsored enterprises enjoy a special exemption under the qualified mortgage rule of the Consumer Financial Protection Bureau. To achieve QM status, a loan must have a DTI ratio of 43 percent or less, but if a mortgage is sold to Fannie or Freddie, DTI ratios can be higher. In the second half of 2017, loans with DTI ratios ...
There aren’t many differences in quality when using an appraisal management company versus an individual appraiser, according to a new staff working paper published this week by the Federal Housing Finance Agency. Appraisal Management Companies (AMC), created to add a layer of oversight to the appraisal process, emerged as key players only after the 2008 housing crisis. The FHFA studied whether there were any systematic quality differences between AMC and non-AMC appraisals and found no evidence of such. Advocates tout AMCs as producing better quality and less biased appraisal reports, which lessens risks to lenders. But others say AMCs offer no quality assurance contribution and argue that their appraisers are less qualified.
There was a significant increase in deliveries to the GSEs of home loans with high debt-to-income ratios during the second half of 2017, according to a new Inside The GSEs analysis of Fannie Mae and Freddie Mac single-family mortgage-backed securities.The two GSEs securitized $52.90 billion of mortgages with DTI ratios ranging from 46 percent to 50 percent over the last six months of the year. That was up 72.6 percent from the first half of 2017, and the annual total was up 37.6 percent from 2016.
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