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Inside Nonconforming Markets

September 5, 2008

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Wachovia Retools Pick-a-Payment Product

Wachovia officials say the legacy option ARM program they absorbed as part of the company’s acquisition of Golden West Financial continues to perform better than most other mortgage products in the struggling market of 2008. But rising default rates, a bleak outlook and the lack of any secondary market in which to sell off the company’s Pick-a-Payment mortgages have led officials to... Read More

GSE Alternative Mortgage Volume Grew in August

Despite a general downturn in new business, alternative mortgage production at Fannie Mae and Freddie Mac increased modestly between July and August, according to a new ranking and analysis by Inside Alternative Mortgages. A total of $6.13 billion of conforming jumbo, interest-only and 40-year mortgages were sold by lenders to the two government-sponsored enterprises... [Includes one chart and one graph] Read More

OTS Advises Lenders on HELOC Changes

Lenders need to keep close watch on home-equity lines of credit, especially those with interest-only payment plans or extended terms, says the Office of Thrift Supervision. HELOC credit risk has come under the spotlight over the past year as declining house prices have eaten into homeowner equity and increased leverage. Recent data on HELOCs securitized in the non-agency... Read More

Fitch Predicts Dark Times Ahead for Option ARMs

The option adjustable rate mortgage has emerged in the crosshairs of a housing correction that appears ready to expose borrowers with strained finances to sharply rising payments and little recourse to refinance their way out. In a special report released this week, Fitch Ratings predicts that many option ARMs will start to reach their debt limits earlier than anticipated... Read More

S&P, Moody’s Find Further Alt A Deterioration

The performance of mortgage pools in Alt A mortgages securitized in recent years continued to weaken throughout the first half of 2008, according to an update released in late August by Standard & Poor’s.S&P reported that delinquencies for Alt A MBS transactions originally rated in 2005, 2006 and 2007 continued to increase significantly in the past six months. As of the July 2008... Read More

MBA Seeks Guidance for Borrower-Rescue Plan

The alternative mortgage product with the best growth may be the new FHA refinancing program authorized by the 2008 housing act, but industry groups say government officials designing the program need to be careful that it works for investors and servicers. Under pressure from key members of Congress, the Bush administration is racing to put together a new HOPE for Homeowners program... Read More

Lawmakers Try to Reinstate Seller-Financed DPA

Just one month after a Housing and Economic Recovery Act of 2008 provision ended a popular FHA program that allowed seller-funded downpayment assistance, bipartisan legislation aimed at reversing the decision surfaced in the House of Representatives. Reps. Al Green, D-TX, Maxine Waters, D-CA, Gary Miller, R-CA, and Christopher Shays, R-CT, introduced H.R. 6994, the FHA Seller-Financed... Read More

FDIC Offers Best Practices for Low-Mod Lending

The Federal Deposit Insurance Corp. released a list of five best practices that lenders should follow when dealing with low- and moderate income borrowers, who often turn to alternative mortgage products in an effort to qualify for homeownership. “As bankers increase mortgage lending, and do it the old-fashioned way with downpayments, long-term fixed rates, documented income and the... Read More

HUD Issues Final Rule on HECMs

The Department of Housing and Urban Development is finalizing revised methods for calculating FHA claim amounts for its Home Equity Conversion Mortgage program. The first change will extend the date for calculating the maximum HECM claim amount from the date of the underwriter’s receipt of the appraisal report to the date of the closing... 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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