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Inside Nonconforming Markets

September 22, 2006

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Guidance Could Come Soon, Regulators Say

Long-awaited regulatory guidance that will set standards for the underwriting, marketing, and sale of nontraditional mortgage products will be issued soon, regulators say. But that promise may not be enough to quell lawmakers who want swift action to crack down on what many see as growing default and foreclosure risks associated with interest-only loans. At a joint hearing of the Senate Banking Subcommittees on Transportation and Housing and Economic Policy this week, Sandra Thompson, acting director of supervision and consumer... Read More

New Disclosures Needed for Nontrads, GAO Says

Originators of nontraditional mortgage products need to do a better job of disclosing the risks to borrowers, a report from the government’s watchdog agency said. “Most of the [alternative mortgage product] disclosures we reviewed did not fully or effectively explain the key risks of payment shock or negative amortization for these products and lacked information on some important loan features, both because Regulation Z does not require lenders to tailor this information to these more complex products... Read More

Combos Used More by Minorities, Fed Study Finds

Looking for the best place to pitch combination loans to interested borrowers? New Home Mortgage Disclosure Act data suggests that residents in low-income and minority neighborhoods make greater use of 80-20s and 80-10-10 loans than borrowers in other areas. That was one of the key findings from an analysis of HMDA data completed by the Federal Reserve Board, published earlier this month, which tried to get a handle on how piggybacks are being used – and who is using them... Read More

Changes Help GreenPoint Manage Alt Portfolio

Changes to its technology and collection policies have helped GreenPoint Mortgage more effectively manage one of the alternative mortgage market’s largest loan servicing portfolios. That was the verdict of Fitch Ratings, which recently assigned the North Fork Bank subsidiary RSP2, or above average, Alt A and home-equity line of credit servicer ratings. “The ratings are based on the company’s experienced management team, established technology, and improved internal controls,” Fitch said. The company, which will soon... Read More

Bank of America Tops Banks and Thrifts in HELs

Banks and thrifts have seen their home-equity portfolios grow modestly this year, a new Inside Alternative Mortgages analysis reveals. Data culled from bank and thrift call reports filed with federal regulators show that depository institutions held a record $753.73 billion in home-equity products in their portfolios at the end of June. That marked a 5.2 percent increase from the second quarter and a 7.4 percent rise from the end of 2005... [Includes one full-page data chart.] Read More

Countrywide Touts ‘Responsible’ Option ARMs

Countrywide Financial is touting an origination disclosure and servicing process that it claims will help reduce the risks for option ARM borrowers. The process was outlined by Countrywide Chairman and CEO Angelo Mozilo during a recent day-long investor conference in New York. He said that the company has focused on warning customers early and often about the details of their option ARM loans – Countrywide’s most profitable product... Read More

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