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Inside Mortgage Finance

September 22, 2006

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Regulators, Lenders Get Heat from Senate on Growing Nontraditional Mortgage Woes

Senators from both sides of the aisle urged federal regulators to act more quickly to protect consumers who use nontraditional mortgages and pressed lenders to defend their “education first” approach to the problem. Lawmakers used a joint hearing of the Senate Banking Subcommittees on Housing and Transportation and Economic Policy to sound alarms about the growing presence of option ARMs and interest-only loans. Both Republicans and Democrats expressed concern that loose underwriting, rising interest rates... Read More

ARM Market Share Declines Slightly in 2006 But Nontraditional Products Keep Growing

A modest – but steady – compression in the spread between mortgage commitment rates on fixed- and adjustable-rate loans has gradually eroded the ARM share of new loan production, according to a new Inside Mortgage Finance ranking and analysis. But the fact that ARMs still account for a historically high 45.8 percent of mortgage originations during the first half of 2006 underscores the dramatic change that has taken place in the market since the... [Includes 2 data charts and 1 graph from the Inside Mortgage Finance database.] Read More

Mortgage Industry Concerned GSE Patents May Foreshadow Entry into Primary Lending

The awarding of two related patents to Fannie Mae for a system to build customized mortgages has reignited smoldering concerns among many mortgage lenders that the government-sponsored enterprises are encroaching on an already overheated primary market. Although Fannie Mae quickly said it would not deploy the systems... Read More

White House, Treasury, OFHEO, Sarbanes, Oxley Continue Priming the GSE Reform Pump as Time Drips Away

The scheduled Congressional adjournment on Sept. 29 is spurring renewed efforts to jar loose the stalled legislative effort to reform oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. But many observers remain skeptical a deal can be done this year. Sen. Paul Sarbanes, the ranking minority member on the Senate Banking, Housing and Urban Affairs Committee, is reportedly meeting this week with James Lockhart, the director of the Office of Federal Housing Enterprise Oversight... Read More

Piggyback Loans Continue Success in 2005 Over Private MI, Identification of Combo Loans Show Improvement, Says Fed

An estimated 22 percent of first-lien, residential home purchase loans originated in 2005 involved a “piggyback” loan, or a simultaneous second, up nearly 14 percent from 2004, according to the Federal Reserve Board’s analysis of the latest Home Mortgage Disclosure Act data. Piggyback financing has emerged in recent years as an alternative to traditional private mortgage insurance and an affordability strategy for cash-strapped homebuyers. In a typical piggyback transaction, a borrower takes... Read More

Fraud is on the Rise, But Outlook Depends On Whether the Economy Will Get Worse

Sherlock Holmes, who reportedly read “nothing except the criminal news and the agony column,” could have plenty to digest in the contemporary mortgage market that is being inundated by fraud that costs lenders hundreds of millions of dollars. Most mortgage fraud experts predict things aren’t getting better. CoreLogic has just released the second quarter results of its newly launched Core Mortgage Risk Monitor, which shows a 5 percent rise from the first quarter in the likelihood... Read More

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