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Inside Nonconforming Markets

May 19, 2006

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GSEs Warm to Alt Loans as Climate Changes

Breaking ranks with many industry groups, Fannie Mae says that proposed guidance on nontraditional mortgage products could provide important standards for the market and improve secondary market execution, at least from its perspective, for products such as option ARMs and interest-only loans. At issue is guidance floated by federal bank, thrift, and credit union regulators, which would establish new standards for the underwriting, marketing, and sale of exotic loan products. Regulators have argued that… Read More

Profits, Challenges, the Story for Alt Lenders in 1Q

Alternative mortgage lenders entered the second quarter of 2006 with some questions hovering over their businesses. In particular, no one seems quite sure how pending regulatory guidance will change the origination landscape. But recent earnings reports suggest that, while times are challenging, lenders have basically been able to push ahead and grow their businesses by adding profitable new originations to the books. … Read More

Fear Not a Factor in Merger, Golden West Says

A long-time player in the option ARM market is selling out. But officials at Golden West Financial Corp. say that those who believe the company has decided to merge with banking giant Wachovia out of fear for what the future may bring haven’t been paying attention. “I was listening to the brilliant Bloomberg today and MSNBC today and I heard all of the brilliant comments that were called in: ‘Well, they’re worried about the… Read More

Wells Leads Stable IO Market in 1Q 2006

Reports of the demise of the interest-only mortgage appear greatly exaggerated. While the market is clearly slowing as a result of economic and regulatory changes and borrower preference, lenders nonetheless managed to make a bit of headway in the early part of 2006. Overall, an estimated $140 billion in new IO loans were originated during the first quarter of this year. That was up slightly from the estimated $133 billion in new IO loans that… [One data table included] Read More

Stated Income Loans Feeding Fraud, MARI Warns

The use of alternative or reduced documentation can help turn loans around more quickly and save borrowers and lenders the hassle of finding and reviewing documents. But it also appears to be feeding a dangerous trend: an upswing in mortgage fraud. That was one of the key findings of a report issued by the Mortgage Asset Research Institute, or MARI. The report, commissioned by the Mortgage Bankers Association, is the eighth in an annual… Read More

Asian Market Presents Opportunity, Study Finds

Lenders developing new mortgage products for emerging market segments would do well to pay attention to the culture and needs of Asian Americans, a new study suggests. Much of the attention on so-called emerging or underserved markets has focused on Hispanics, a rapidly growing segment of the population that is expected to have high demand for mortgage credit in the years ahead. But a report released last week by the Asian Real Estate Association… Read More

Fed HEL Hearings Could Shape Alt Loan Guidance

A series of hearings on home-equity lending set to begin next month could play a key role in determining the shape of regulatory guidance on nontraditional mortgage products. The series of four hearings, called by the Federal Reserve Board as part of its required review of the Home Ownership and Equity Protection Act, will focus on predatory lending and the impact of HOEPA rules, and state and local anti-predatory lending laws on the subprime… Read More

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As homeowner equity continues to build, more and more lenders are launching home equity lending products. Are you thinking of joining this market?

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